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The Surety
The Surety
Construction’s “Sports Book”
Sureties operate the “sports book” for the construction industry. They handicap risk by setting rates and issuing bonds. They “book” the contractor’s bet that he will complete a project as contracted. They “set the line”.
Growth Risk – Working Outside Normal Expertise
In our … Read the rest “The Surety”
Risk Minimization
Risk Minimization
(Part 2)
In last week’s blog, Construction’s No-Win, research data led us to the conclusion that risk cannot be effectively transferred in contract negotiations and that only highly competent contractors can manage risk for all stakeholders. “Risk is best managed through cooperation not confrontation.”
The Current Discussion
… Read the rest “Risk Minimization”
Construction’s “No-Win”
Construction’s “No-Win”
Risk Management/Transfer
A survey of 125 construction owners by Engineering News Recordfound that only half would hire the same construction firm again, a third of all projects were over budget, nearly half were completed late, and 13% were involved in litigation.
This dismal picture of construction industry … Read the rest “Construction’s “No-Win””
Productivity a Risk Factor
Productivity
A Risk Factor
Our ongoing discussion of Risk has led us to take a look at labor productivity. One of the most important factors in accurate estimating, planning, and executing profitable contracts is forecasting a productive labor force that can produce the desired output. However, accurate estimates of … Read the rest “Productivity a Risk Factor”
Sources and Uses of Funds
Sources and Uses of Funds
In our ongoing discussion of risk throughout 2018, the multiple risk factors identified boiled down to one core flaw that brought down the majority of failed contractors – a shortage of capital. For one reason or another, the failed contractors simply ran out of … Read the rest “Sources and Uses of Funds”
Fixed-Price Rest In Peace
Fixed-Price
Rest In Peace
An article in The Engineering News Recordforetells the ultimate demise of fixed-price contracts:
SNC-Lavalin Fixed-Price Exit Could Boost Rival
July 27, 2019 ENR, Debra K. Rubin
Canadian design-build giant SNC-Lavalin Group Inc. said on July 22 it will no longer bid on future lump-sum turnkey … Read the rest “Fixed-Price Rest In Peace”
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