Every Friday, we select a few articles from the week that we think are worth your time as a construction financial manager (CFM). We look for compelling articles not only about financial topics, but about business, technology, and life, that challenges you to think about your role as a CFM in different ways.
What do you look for when deciding to accept or decline a job?
Every construction job comes loaded with risks: risk of non-payment, damages, litigation, etc. ENR.com notes that they’ve seen “ever-more aggressive efforts by developers and project owners to off-load risk,” so they conducted a survey to discover which red flags contractors look for that indicate too much risk. What would convince somebody to turn down a job?
The top responses include:
- Inexperienced developers
- Liquidated (or limited) damages clauses
- Pay-if-Paid clauses
- Demands to forfeit lien rights
- Excessive penalties for delays and mistakes
- Excessive retainage
On the flip side, risks provide opportunities to those willing to take on more risk. However, this is usually limited to larger companies with greater resources. ENR spoke with a number of contractors about their own experiences with risk. Visit ENR.com to hear it in their own words.
“In the case of a major development, all it takes is one or two owners irked about some perceived problem or mistake and your company can find itself with a major problem.”
“The invoice as we know it will die”
Sune Theodorsen made that prediction in May, adding, “Business will be become centered around communication instead of documents.”
What if we transformed bureaucratic, document-heavy, rubber-stamp activities into legitimate forms of communication? What if rather than waiting for pre-determined moments to invoice or dispute, we dealt with issues and changes as they happened? How might that change the entire procure-to-pay process?
I liken this possibility to that of a doctor’s office. Most doctor’s offices are dreary and ugly, but they don’t have to be. There’s no rule that says we have to be unhappy when we’re in a waiting room, or in a school classroom. By that same toke, why do invoicing and collections have to be the way it is? We have the tools to achieve a more useful, more user-friendly, more mutually beneficial mode of communication. Let’s do it.
> Read Theodorsen’s predictions about the future of invoicing
Mechanics Liens on True Detective?
It’s important to have fun at work. So when the realms of construction payment and pop culture overlap, we like to highlight it: Last week’s episode of the hit HBO show True Detective not only referenced liens, it revolved around liens.
Want to spice up your next conversation about mechanics liens? Read our article about liens on True Detective (spoiler alert).