Cash Flow Tip 3 - Contractual Details Matter

The reason we are commonly called contractors is because we work off of a contract that defines the scope and terms of what we build.

D. Brown Management Profile Picture
Share

The act of building is simply a subset of contracting; not the other way around.  

Cash Flow: Tip 3 Contractual Details Matter

Negotiating then managing every aspect of the contract including the building of the project is what defines leading contractors and project teams. 

This starts with all leadership and key project team members knowing contractual terms deeply including how they impact risk including cash flow.  

  • On a scale of 0-10 how would you rate the contract knowledge of your project team?

The next step is being able to negotiate terms effectively both getting critical items in the contract setting a minimum standard then negotiating throughout the project getting those minimums exceeded.  

We have watched two PMs from two nearly identical contractors working for the same public agency negotiate very different T&M rates and billing cycles.  One PM got 17% higher rates AND got 2 week billing cycles. The other PM accepted the “standard” laid out in the original contract.  

  • On a scale of 0-10 how would you rate the average negotiating ability of your team?

Construction law, contract management and negotiating are as trainable as bending conduit.  How much have you invested in teaching your project team these skills? What could the return be worth?


RESOURCES:

Never Split the Difference

Secrets of Power Negotiating

We are revamping our publicly available cash flow workshop that includes these 18 tactics that contractors can use to accelerate cash flow. Stay informed of updates on release.


Cash Flow
Great cash flow is a key driver of valuation and successful successions. Running out of cash is is the #1 reason contractors fail. Improving cash flow improves your Return on Equity. Protect yourself and never let cash flow be the limitation to your profitable growth....

Cash Flow
Great cash flow is a key driver of valuation and successful successions. Running out of cash is is the #1 reason contractors fail. Improving cash flow improves your Return on Equity. Protect yourself and never let cash flow be the limitation to your profitable growth....

Leading Change Quote - Arthur Schopenhauer
If you see something that no one else sees you are either genius or crazy of some combination of the two. If what you see is so big that you can’t ignore it be prepared for a long journey through the process of change.
Technology Integration - Critical Inflection Points and Streamlining Workflows
Construction technology can no longer be treated like a “Project” with a beginning, middle, and end to the implementation. There are now hundreds of specialized technology tools that can be implemented by contractors and each add individual value.
Retirement Onboarding - Transferring Your Knowledge to the Team
Knowledge transfer is hard. How do you effectively take the knowledge that one individual has accumulated over a lifetime with a company and transfer that knowledge to the next person in line?