How to (actually) use the Contract
Without being a jerk and sacrificing your relationships.
Today's Highlights:
The Goal: Learn to use the Contract like a professional instead of like a jerk.
Every project in your career with have a Contract, but most Contractors let it get in the way of running a smooth project.
Today, I’m going to share 4 tips for using the Contract effectively so that you can run smoother projects where the Contract hardly comes up. You’ll look more professional and your relationships will be strong. Win-win!
How to (actually) use the Contract
Since every construction project starts with signing a Contract, you would think Contractors know how to use it to run a successful job.
But, in my experience, a lot of Contractors not only don’t know how to use it, but they let it become a source of conflict that impacts their people, their production, and their profits.
There’s nothing better than a job where the Contract hardly comes up, right? Now, imagine being able to create that type of environment on every project.
Believe it or not, it’s possible.
Today, I’m going to go through 4 Tips on how you can make it happen—even if you’re dealing with bad GCs/owners who may want to use the Contract as a weapon.
Tip 1// Read and Markup the Contract
A Project Executive from a large, national GC once told me story:
“I was talking to the President of this Subcontractor about his Contract comments.
He said, ‘You want me to be timely, meet the Schedule, always have people available, and overall be aB professional, but then also want me to sign the Contract without reading it or marking it up? How would that be professional?’
There was nothing I could say. He was right.”
My takeaway:
Professional Contractors read and markup the Contract.
It doesn’t make you bad—it makes you a professional.
Tip 2// Get familiar with key terms
There are certain terms you need to understand on EVERY project.
A few of them are:
Delay
Schedule
Change Orders
Right to Cure
Drawings
Specifications
Depending on the Contract, your responsibilities will change.
So, know what you’re agreeing to. Otherwise, you’re just asking for conflict when one of those items comes up and you don’t know how to handle it.
Tip 3// Set boundaries with your partner
Once you’ve read, marked up, and agreed to terms on the Contract, set boundaries with your GC/Owner partner.
For me, this usually sounded like:
“Thanks for working through these terms together. Now that we’ve got them done, I hope we will never reference the Contract again. The way I try to operate—I lead with being fair and trying to do what I believe is right—whether that means making or losing money on the deal. I promise to be fair with you and try to work things out person to person before going to the Contract. Can you agree to the same?”
No one wants to battle over the Contract.
Just make sure to truly be fair and live up to your end of the agreement. And hold your partner accountable to the same.
You can avoid 90% of the situations where the Contract causes conflict.
Bonus: A best practice is doing this as a part of a Project Kickoff Process:
Execute the Contract
Set up a Project Kickoff Meeting with your client
Read the Contract together, go through scopes, review drawings
Get aligned on your goals and expectations for the project
It’s simple, but it’s amazing how much better the job runs when you sit down and review it together (including the Contract) before you start.
Tip 4// Stay Objective
In some cases, you will absolutely need to come back to the Contract to handle a hard situation.
Maybe you messed up and missed a delivery date.
Maybe the client is behind and causing your crew to get backed up.
Maybe you haven’t been paid for 90+ days.
If that—or many other situations—come up, then you need to use the Contract despite whatever other agreements you made.
When it does, make sure to stay objective.
This means instead of sending an email like this:
“We have been nothing but supportive and you haven’t had our back one time! Now our crews are behind and we can’t get back on track. You need to pay us.”
You should say something like:
“The delays from other subcontractors have caused our crews to be delayed. So far, we are tracking 4 days of lost time for 5 men. We can send the back up. Please consider this an official notice that we will not be able to meet our Contract Durations because of delay caused by other Contractors. Can you please provide us a PCO# and send any questions.”
In email #1, you’re being subjective and angry.
In email #2, you’re showing you understand the Contract and your responsibilities within it.
Always stay objective when you do get into a dispute.
Spark Notes:
Conflict is a huge part of construction.
Most of it stems from one side or another using the Contract as a weapon.
You can use the Contract more effectively if you do these 4 things:
Read the Contract
Know the key terms
Set boundaries with your partner
Stay objective
You’ll be running better projects with less conflict in no time.
Go give it a try tomorrow, and let me know how you do.
