The construction industry is perpetuated by a truly symbiotic process, in that all parties involved – project initiators, architects, engineers, contractors and more – rely on one another in order to achieve the best results possible. This coordinated effort is absolutely essential; the sum of all these parts equals a successful end product. That said, each one of these parties has the capability of completely ruining a construction project! In this 4-part series, we’re talking about how construction projects get screwed up. This article will be focused on 11 ways contractors screw up construction projects.
Check Out The Other Parts In Our “Screwed Up Construction” Series:
Part 2: Architects | Part 3: Engineers | Part 4: Clients
Contractors: What’s Good About Them
Let’s start with the positives! Here are a few good things to say about contractors:
- Contractors Make It Happen: If any construction project is ever going to be completed, it’ll be a Contractor that performs the work.
- Take Some Of The Biggest Risks: From a safety and financial perspective, Contractors take on a lot of risk when agreeing to work on a project – particularly in lump-sum contract arrangements.
- Responsible For The Physical End Product: While Contractors are by no means solely responsible for the successful completion of a project, they are almost solely responsible for the physical successful completion.
Now with that said, let’s get into it…
Disclaimer: I’ve work as a contractor, coordinated work with other contractors and hired many subcontractors over the last decade! These examples are based on anecdotal experiences I’ve had myself or have heard about from others. Therefore, I am not a legal counsel or advisor of any kind.
Here Are 11 Ways Contractors Screw Up Construction Projects:
- Exploiting Fine Print & Fishing For Change Orders
- Underbidding The Job
- Hiring The Cheapest Subcontractors
- Spreading Resources Too Thin
- Walking Off The Job (Before It’s Done)
- Buying & Installing Cheap Or Wrong Materials
- Cash Flow Issues – Underbilling, Overbilling, Not Having Money
- Hiring Inexperienced Managers, Supervisors & Trades
- Overpromising & Underdelivering
- Lack Of Coordination Between Trades
- Poor Safety Management Onsite
Obviously, this list only applies to select contractors and of course, every situation has its’ nuances. Let’s get started!
1. Exploiting Fine Print & Fishing For Change Orders
It’s an age-old technique with certain contractors – give a bid (usually a low ‘teaser’ price), sign a contract and get to work…on looking for as many change orders as possible!
Contractors try to pull this trick for a few reasons:
- Bidding the project at a low enough price point will greatly increase their chances of being awarded the job. The contractor in these instances knows that they’ll probably be getting more money later, so they’re not worried about getting the job done for that price.
- Collecting a deposit up front – before any real work begins – gives the contractor leverage to effectively bully the client into paying whatever’s billed and for additional change orders in order to not ‘lose their investment’, should the contractor walk away. They’re a lot more confident that they’ll be able to work on their terms due to having this leverage.
- If the contractor’s bid proposal and/or agreement terms contain lots of very specific qualifications and clarifications, there’s a good chance this is for a reason…to cover their [you know what]. Should any conditions in the signed contract not be met, the contractor isn’t technically wrong for asking for additional money. The real issue lies in the fact that these conditions should have been thoroughly reviewed, clarified and/or removed completely from the official executed contract in the first place. Tricky.
As one can imagine, contractors screw up construction projects in many ways over change orders:
- Along with claiming additional funding, contractors may also claim additional time, which makes the project take longer than expected.
- Fishing for unwarranted change orders obviously makes the project cost more than expected.
- Should a disagreement arise, the contractor may walk off the job – sometimes with a deposit in hand – and either stop picking up the phone or head to court over it, all while the project sits idle and incomplete.
Of course, there are many instances where a change order is perfectly legitimate. The legitimacy of change orders comes down to the ethics of the contractor and the documents/conditions that their bid and contract are based on.
Related: Change Order Best Practices: What Contractors & Clients Need To Know
2. Underbidding The Job
Whether done by accident or intentionally (as discussed above), contractors screw up construction projects in many cases by underbidding the work.
Underbidding a construction project can come in many forms. Here are a few examples:
- Underestimating the quantity of labor or materials required to do the work.
- Underestimating the amount of time and coordination needed to get the work done.
- Intentionally providing a low bid proposal up front and trying to make up for it through change orders as described in section 1.
- Straight-up not understanding the means and methods required to do the work being asked of them.
Regardless of the reason, including whether or not the underbidding was intentional, the project will not get done as expected for a variety of reasons:
- The contractor may not have the money to pay for the materials or labor they left out of the bid.
- Contractors can’t keep schedule and the project will get dragged out, which will cost everyone involved more time and money.
- The contractor could walk off the job instead of lose money.
- End products will be subpar if the contractor cheaps out on what’s needed to do it right.
As one can see, underbidding projects has the capability to mess up a project badly in a few ways.
Related: How To Estimate Construction Costs: Our Comprehensive Guide
3. Hiring The Cheapest Subcontractors
Ah, the temptation a cheap proposal brings. You’re a general contractor. You’re looking for pricing on say, roofing. You have a budget of $50,000 in your bid and you collect three prices from roofing contractors: $55,000, $47,000 and $33,000. If the low bidder is hired, that could mean a big savings on the bottom line! More profit!
Rarely does this work out.
There’s an expression in construction: hire the cheapest contractor and you’ll use the money saved to buy Advil for all the headaches you’ll experience.
The cheapest contractor, aka ‘lowest bidder’, is usually the result of one of the following scenarios:
- The lowest bidder plans to make more money from change orders (see item 1)
- Low bidders forget something important in their bid (see item 2)
- The low bidder has no understanding of the actual scope of work.
- Lowest bidder does really crappy work.
In terms of how contractors screw up construction projects, the result of hiring the cheapest subcontractors for the sole reason of them being cheap is self-explanatory.
Related: Our Comprehensive List Of 25 Ways Contractors Lose Money
4. Spreading Resources Too Thin
Oftentimes, contractors screw up construction projects simply by not spending enough time on them. In other words, spreading their resources too thin.
Spreading resources too thin comes in many forms:
- Bidding on a lot of projects and not giving each on the proper amount of attention.
- Coordinating too many projects at one time and not staying on top of hitting schedule milestones.
- Trying to ‘wear too many hats’ i.e. one person bidding, managing and supervising projects.
- Not supervising onsite labor forces or overall progress, leaving them to guess what to do next, work without proper supplies or not work as efficiently.
PROMOTION
In the words of Ron Swanson, “Never half-a** two things. Whole-a** one thing.”
Related: How Do You Manage Multiple Projects Effectively? Our Top 10 Techniques
5. Walking Off The Job (Before It’s Done)
It’s obvious but worth repeating – when a contractor walks off the job, it won’t get done! Not on time or on budget, anyways. As with most things, though, there are nuances to consider.
A contractor could walk off a project due to disputes with the client or the owner’s representatives for any number of reasons, including those discussed above. Here are some common ways contractors screw up construction project by walking off the job, regardless of whether or not it’s the right thing to do:
- When the contractor stops showing up, who will get the job done? Goodbye, schedule.
- If the contractor has been paid more than what they’ve spent (aka are in the black financially), they’re much less likely to return.
- If a contractor walks off the job, the Owner will need to hire someone else to finish the work. This means they’ve paid the original contractor x-amount of money already, then find a new contractor via bidding, who will almost certainly charge more than the amount unpaid to the original firm since they’re inheriting other’s problems, they have to mobilize, etc. Time and money will be lost.
One common thought that clients have is something like: “The signed contract states that the work MUST continue during disputes! The contractor can’t just walk away!“
Ok great. But so what? Owners can’t physically make them show up and finish. Heck, the contract may even state that the contractor must pay for their replacement to finish! In order to get that money, though, clients must:
- Hire a lawyer.
- Give notice in writing to the contractor (notice of default, etc.).
- Bring the contractor to court after x-amount of time.
- Work through the legal system, which could take weeks, months or years.
- Pay lawyers the entire time.
- Reach a settlement or verdict.
- Await payment from the contractor, assuming they have the liquidity.
- Meanwhile, the projects sits idle and incomplete unless the client goes into pocket to pay for a replacement in the meantime.
That’s not all, either. What if the contractor declares bankruptcy? What if their own lawyer finds fault in how the client proceeded i.e. not following the contract terms to a ‘T’ and in turn rendering the agreement void? Money will be spent, time will be lost and the project probably won’t get done – period.
Of course, there are many instances when walking off the job is the right thing to do for a contractor, including if the client isn’t upholding their responsibilities (not paying, etc.). The above instances describe worst-case scenarios.
Related: 10 Things To Exclude From A Construction Bid, Proposal Or Contract
6. Buying & Installing Cheap Or Inappropriate Materials
Cheap materials are cheap for a reason.
If the client specifically requests that the contractor use a specific material that’s cheap and of low-quality, that’s one thing.
If the design documents or specifications call for a certain grade or make/model of materials and the contractor intentionally goes for a cheap substitute, that’s another thing entirely.
“But it’s basically the same stuff!“
On a large enough project, using a material that’s marginally cheaper than what’s specified and expected can offer a savings to the contractor but a subpar finished product for the Client.
Take a common material caulking for example. Let’s assume that the product specified costs $12.00 / 12-oz. cartridge. On a large project like a commercial building, the contractor could need thousands of tubes of caulking. If they find a different ‘similar’ product that’s a few bucks per tube cheaper, this adds up to a big different in cost.
This is one of countless examples we could come up with on a wide variety of project types.
Obviously, something like this will be noticed fairly quickly on a lot of projects, but the point is made – contractors screw up construction projects in many cases when they opt for alternate and/or subpar materials that aren’t approved by the client in order to save some money.
If the client doesn’t know any better, they can even be convinced that the alternate material is just as good, when it’s really not.
Related: Does Weather Affect Construction? 10 Ways Your Project Will Be Impacted
7. Cash Flow Issues – Underbilling, Overbilling, Not Having Money
Construction is a costly industry for all involved – clients and contractors alike.
Contractors must pay laborers and tradesmen on a weekly basis, despite rarely getting paid that frequently themselves. Contractors must also have enough money to purchase materials, manage the work and procure tools and equipment for doing the job.
When a contractor can’t make payroll or has no money/credit to buy the things they need for the project, the job will come to a halt.
This can happen when a contractor doesn’t have money or credit on-hand, but it can also happen by under-billing the client. Said another way, contractors can run out of money when they don’t bill the client enough to cover some of their upcoming costs.
On the flipside, contractors might also overbill the contractor early in the project and in turn, not have enough money coming in to cover their construction costs towards the end of the project – particularly if they’re experiencing budget overruns!
In construction, cash is king. Especially when it comes to unforeseen project conditions.
Related: How Does Progress Billing Work In Construction? The 8 Essential Steps
8. Hiring Inexperienced Managers, Supervisors & Trades
Contracting is a coordinated effort between management, onsite supervision and tradesmen. Construction is also one of those industries that hasn’t succumbed to recruiting the “younger, tech-savvy proteges” – in fact, the more experience one has in the realm of construction, the better they get at understanding the overall process. This applies to management and trades alike.
Let’s use a metaphor: climbing a mountain.
Sure, a younger mountain guide may have energy, enthusiasm and perseverance. They may even know a thing or two about climbing a mountain. How many different scenarios have they experienced, though? Do they know what to do when ______ happens? Maybe not!
Having a lack of experience isn’t anyone’s fault – only time and effort can bring it about. Young or new talent may have great potential, but they simply need more time. This is why most trades require a multi-year apprenticeship before a tradesmen can be trusted to work on their own.
Just like we need to have an experienced mountain guide out in the woods, clients need to have experienced contractors on a project to pull it off. There are anecdotal examples of inexperienced people pulling off construction projects, but experience is required for success most of the time.
Related: Construction Project Team: Roles And Responsibilities
9. Overpromising & Underdelivering
Even the worst construction projects start out with good intentions.
One of the ways this happens is when contractors make big promises up front – in other words, talk a big sales game – but not be able to make good on the promises they’ve made.
It happens all the time, particularly in industries where sales and marketing play a big role in getting more work.
The sales person or team is focused on doing whatever it takes to get the project. This could include agreeing to take on additional work for free/cheap, drop their price a little lower in order to get the job or jump through other hoops to get the award.
In fairness, some earnest salespeople are in a tight spot here. If they win the job, they run the risk of taking the blame when the promises made were too large. If they lose the opportunity, they get blamed for it, too!
Then there are salespeople who just want the credit for the ‘big win’ and will make whatever promises they need to make that happen.
Whatever the reason, promises made are only as good as promises kept. When an individual lies on their resume to get a job, they’ll probably fail to do their job adequately. Similarly, contractors screw up construction projects when they can’t uphold the terms and conditions they agreed to before they were awarded the project. They simply cannot or will not do what’s expected of them.
Related: What Is It Like Being A Construction Project Manager? A Day In The Life
10. Lack Of Coordination Between Trades
Construction projects vary greatly in size, type and complexity.
On more straightforward projects, there might be only one trade working. Painting a building requires painters. Steel work requires ironworkers. Lighting and wiring requires electricians. So on and so forth.
When multiple trades are required to get a project done, though, the coordination between trades becomes much more important.
PROMOTION
One of the ways contractors screw up construction projects is by not coordinating the work adequately between trades. In fact, construction projects can get massively messed up due to lack of coordination! Here are some examples:
- Sequence: A framing and drywall contractor puts up partition walls before a large HVAC unit needs to roll through to a corner utility room. It doesn’t fit through any doors. Oops!
- Access To Work: An exterior facade contractor needs to have a certain section of wall done by the end of the month. Turns out, landscapers are also scheduled to get their work done immediately below that wall. The facade contractor would need to work on top of the landscapers – literally!
- Safety: Too many examples to mention, but we have written an article all about basic site safety for Project Managers. In this article, one can imagine how a lack of coordination between trades can easily lead to one of these types of accidents taking place.
Lack of coordination between trades on the job site can be costly in terms of time, money, patience and worker safety. Speaking of which…
Related: How Do You Manage Subcontractors? 7 Essential Tips
11. Poor Safety Management Onsite
Nothing brings a project to a grinding halt like an accident occurring.
First off, any life that’s altered or lost on a job site is a tragedy. In this day and age, we all know what’s needed to keep workers safe. With the amount of training, precautions and general awareness available, there is no excuse for a preventable accident taking place!
I’ve thankfully only had minor injuries myself as a laborer or have had minor injuries occur on a project I’ve managed. Truly, this is a testament to the practices of the company and/or workers onsite – I’m not taking the credit for it.
That said, I’ve worked for a contractor that had a major accident occur during my time there. Believe me, it’s bad. Here’s what to expect, at a minimum:
- Entire job site will be shut down while Dept. of Buildings, police and OSHA investigate.
- Expect to be sued by anyone who is injured, or by the families of victims if a fatality occurs.
- Expect to be fined by various parties, including the Dept. of Buildings, OSHA, etc. These fines are massive.
- News and media will report on it.
- Potential criminal charges could be brought onto supervisors, managers or even other workers onsite, depending on what happens.
- Clients can get dragged into it and can be deemed responsible.
- Companies can go bankrupt depending on fines, lawsuits, repair costs and potential increases in insurance premiums.
The list goes on and on, but I think it’s obvious what type of impact a major safety accident can have on a project!
Related: What Is A Project Safety Plan? Free Construction Safety Plan Template!
11 Ways Contractors Screw Up Construction Projects: In Summary
There are hundreds, if not thousands, of great contractors out there. The examples we’ve discussed of the different ways contractors screw up construction projects vary in frequency, depending on the specific example. Fortunately, thousands of construction projects are completed successfully every year. That said, we can’t be too careful – knowledge is power! I hope these examples have helped and I appreciate you reading this.
