Construction Executive asked top executives at leading sureties and insurance companies specializing in construction for advice and insights on:
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“If you’re blaming all the contractor and subcontractor defaults lately on the recession and how thin times lead to management mistakes, such as chasing unprofitable work, here’s yet another concern. Business in some sectors is picking up enough or may pick up soon and could create perils from recovery risk.
Based in Farmers Branch, Texas, Trainor Glass shuttered its nine locations Feb. 22 and has made no public statements since then. Trainor was one of two major cladding fabricators and contractors to get into financial trouble this winter.?? The other was the default and temporary shutdown just before New Year’s Day of Whitestown, Ind.-based ASI Ltd., a principal subcontractor on the $825-million Barclays Center in Brooklyn, N.Y. That default delayed completion of the arena’s enclosure and forced extra effort by the prime contractor, Hunt Construction Group, to stay on track for scheduled completion later this year.”
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“How well do your general contractors’ subcontractors measure up? The answer to this question, and a general contractor’s ability to prequalify its subcontractors and manage the consequences of their default, could make the difference between success and failure of an entire project.
When a general contractor enters into a construction contract with an owner, it assumes the risk of timely and complete performance of all of the work. It will often provide the owner with a bond to assure its own performance. In many cases those bonds are required by statute. But, how does that general contractor gain the same assurances from the tradesman who will perform a substantial portion of the work? This is of critical importance when one considers that failure by subcontractors and general contractors alike is not a fortuitous event, like a random bolt of lightning, but something foreseeable and avoidable in these tough economic times.
Most general contractors have developed practices to screen out unqualified subcontractors, monitor subcontractor performance, and protect against subcontractor failure.
In competitive economic environments, the success or failure of a project will depend on the increased vigilance of the general contractor to make wise decisions on which subcontractors it employs. ”
Assurance Screening can assist general contractors in the prequalification process and provide them with necessary data and checks to ensure they are protecting themselves and the project owners. Let Assurance Screening help your company select only qualified subcontractors and Be Sure.
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