What is a Construction Contract While talking about construction contracts and their importance may seem like a repetitive topic, it is one of the most important aspects when considering the construction industry and the success of key players. A construction contract is the method by which terms, conditions, and the fine print of a project and agreement are legally bound together. The contract is a solidified deal made between the parties (usually two—the owner and the contractor) involved in the specified project.
The labor shortage in construction is something contractors have dealt with for decades. The pandemic certainly exaggerated the impact of shortages, but there were fewer and fewer recruits even before the Great Recession. With an aging labor force and a huge demand for labor, the shortage has reached an all-time high.
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Running a successful construction company isn’t easy. The industry is full of risks and challenges that can lead to failure. According to data from the Bureau of Labor Statistics, of the 69,296 private construction firms that started operation in 2001, 56% were still around three years later, 26.6% made it to year 10, and only 17.2% were still in operation 20 years later. That’s a failure rate of nearly 82.8%. Let that sink in for a bit.
In 2020, the CDC found that the construction industry has the second-highest suicide rate in the country, and construction workers are 3.5 more likely to die by suicide. With the suicide rate in construction ranked as one of the highest by occupation, industry leaders and members must take the necessary steps to educate and support those at risk. In addition to spreading awareness and education around the topic, something more sustainable and lasting must be done to help prevent and reduce suicides in construction.
Construction Risk Management: What Contractors Should Know As a construction contractor, you likely contend with multiple risks each day. Every project on which you perform work is unique and likely involves both risks and potential benefits. To be more successful, you must understand how to identify and manage risks on construction projects to help avoid potentially detrimental issues.
Strong relationships between general contractors and subcontractors are an important component of a successful project. These relationships don’t mature overnight, and it takes time and effort from both parties to build a level of trust that evolves into a strong working partnership. Putting in the work to build these relationships can be mutually beneficial to both parties and pay off for years to come.
As a general contractor, building strong relationships with your clients is important to your company’s success. Good client relationships can lead to repeat business, referrals, and word-of-mouth marketing. A good working relationship built on trust and understanding can go a long way when issues arise on a project.
There's over a 50% chance the United States could slip into a recession within the next 18 months according to TD Securities. The construction industry really took it on the chin during the Great Recession. The number of construction firms fell by nearly 150,000 between 2007 and 2013 and over 2.3 million jobs were lost due to layoffs, early retirement, and workers leaving for greener pastures.
Many contractors and owners of construction firms focus on strategies rather than what really makes a difference in improving their businesses. Unlike other industries, construction companies face difficulties in generating revenue. It becomes challenging to get forward with, or even stay ahead, due to extremely slow billing instances and poor profitability.