Background Image
Previous Page  23 / 40 Next Page
Information
Show Menu
Previous Page 23 / 40 Next Page
Page Background

PCCA Journal|4

th

Quarter 2010

23

immunize a contractor from having

to pay twice for its subcontractors’

debts. The solution to the problem is

only partial and involves a series of

steps, the totality of which will cover

most of the problem.

Intake

The first step involves subcontrac-

tor selection. Pay attention to the

quotes you receive and the experi-

ence of those who are quoting. If

one subcontractor quote is markedly

lower that the rest, be suspicious

and inquire. If the subcontractor

is one not normally quoting that

particular kind of work, be suspi-

cious. Lean economic times often

cause subcontractors (and general

contractors) to venture off into areas

of construction work for which they

are ill equipped, and therefore they

are ignorant of the some of the most

important price considerations. Ad-

ditionally, even experienced subcon-

tractors bid work cheaply in order

to keep their crews busy so as not

to lose them to competitors. Unfor-

tunately in the heat of bid prepara-

tion, there is not time for thoughtful

reflection so your analysis must

be immediate and quick. Common

sense must be your guide here: if

something looks too good to be true,

it probably is not true.

Bond and Lien Waivers

Next, as a condition of periodic

payments to your subcontractors,

demand lien and bond claim waiv-

ers from subcontractors at any tier,

and that means sub-sub-sub-subcon-

tractors and suppliers. The problem

is that many general contractors do

not even know who their immediate

subcontractors have used as sub-

subcontractors, let alone who that

subcontractor used as a subcontrac-

tor. Even if you obtain lien waivers

from every entity of which you are

aware, unless everyone in the chain

has made full disclosure, there will

be those of whom you are not aware

and therefore against whom you

cannot protect yourself. Neverthe-

less, you could protect yourself from

substantially most of the potential

claimants by requiring two things:

(1) require your subcontractors to

disclose in writing the existence

of any subcontractors and supply

contracts they have entered into and

(2) require lien waivers from your

subcontractors and those sub-sub-

contractors and suppliers, and if the

sub-subcontracts are large enough,

from even the sub-sub-subcontrac-

tors themselves. The effectiveness of

this portion of the cure depends on

the truthfulness of your subcontrac-

tors. The waivers should contain

an indemnity clause such that if a

payment does not get passed down-

stream and the general contractor

has to pay twice, the subcontrac-

tor agrees to assume the financial

5HDPHUV

3ORZ %ODGHV

1.507.387.6576 • 1.800.533.2077 (U.S. & Canada)

See the complete line at

condux.com!

®

CONDUX

3DGGOH %LWV

:LWK +'' &RPSDFWLRQ %RULQJ

&DEOH 3ORZLQJ 6\VWHPV )URP &RQGX[

6XFFHVVIXO XQGHUJURXQG FRQVWUXFWLRQ SURMHFWV VWDUW ZLWK WKH

EHVW HTXLSPHQW DYDLODEOH DQG WKDW PHDQV &RQGX[ ,QWHUQDWLRQDO

&RQGX[ LV QRZ D VXSSOLHU RI 7ULSOH ' +'' FRPSDFWLRQ ERULQJ

DQG FDEOH SORZLQJ WRROV DQG HTXLSPHQW )RU RYHU

\HDUV

\RX¶YH FRXQWHG RQ &RQGX[ WR GHOLYHU\ WKH KLJKHVW TXDOLW\ FDEOH

LQVWDOODWLRQ WRROV DQG HTXLSPHQW 1RZ WKH\¶UH WKH VRXUFH IRU

HYHQ PRUH XQGHUJURXQG WRROLQJ $QG ZLWK WKH 7ULSOH '

QDPH EHKLQG LW \RX NQRZ LW¶V WKH EHVW

‡ 5HDPHUV SDGGOH ELWV DQG VRQGH KRXVLQJV

IRU +'' DSSOLFDWLRQV

‡ &RPSDFWLRQ %RULQJ 7RROV

‡ &DEOH 3ORZLQJ 6\VWHPV

‡ 0RUH

Continued on page 24