TEN NEW YEAR’S RESOLUTIONS FOR CONTRACTORS-2021

 

As I sit down to write my annual list of resolutions for contractors, I am amazed at how much things changed in 2020. Construction was going well and then, in March 2020, COVID-19 hit. At first, we thought it was going to be a disaster for the construction industry. States, cities and towns shut down projects and many applied for PPP loans. Then, something amazing happened. Construction was considered an essential service and everyone was back to work.  That said, the work world changed: companies were donating their PPE to frontline workers, COVID-19 protocols had to be followed and paperwork had to be filed. Everyone was scrambling to figure out how to comply and keep their businesses going. So, you may or may not ask, what was I, as a construction lawyer doing? I spent March and April thinking about the new risks contractors/construction companies were facing and developing contract clauses to protect the industry. I wrote a number of blog posts with clauses to add to your contracts and refined them as new developments occurred. See, Massachusetts Builders Blog.  Here are the takeaways and goals for 2021: 1.              Prepare for Unforeseen Events. We are working in unpredictable times. Your contract should allow you to delay or cancel jobs depending on unforeseen occurrences. Workers might be exposed or become ill with coronavirus. The same can happen with owners. All sides should have the right to cancel or delay jobs at any time. Although many contracts have had “force majeure” or “acts of God” clauses, these may not be comprehensive enough to protect you if you have to press pause on a project. Review the language in your contracts and add more if necessary. 2.              Allow for Increased Job Costs. The supply chain has been disrupted. As a result, costs of materials may increase. Insert a clause in your contract that allows for a change order if costs increase by more than x%. 3.              Require Compliance from Subcontractors. As with OSHA regulations, your subcontracts have to comply with COVID-19 protocols. I am assuming that regulatory agencies will hold you responsible if your subcontractors are in violation. You also need to protect your workers when subcontractors are on site.   4.              Review Your Insurance Policies It is currently unclear whether business interruption insurance will cover coronavirus-related issues, but it would be worth looking into a business interruption policy. Worker’s compensation claims may also go up, and coverage may not be in place for COVID-19. It’s time to have a conversation with your insurance agent. 5.              Work on Your Payment Schedules It is really important to make sure that the money is even with, or stays ahead of the work. The economy is volatile right now and people are losing their jobs. This is not the time to have a customer suddenly unable to pay and cancel a project. You can include a clause in your contract that says that if you are insecure, you can require your client to escrow the payments for your project. It is time to include that clause in your contract. 6.              Waive the Right to Sue and be Sued for Contracting COVID-19 Let’s face it. People are going to try suing each other for transmitting the virus. I don’t think these lawsuits will prevail, because it is virtually impossible to prove how and from whom you got sick. That said, I would just have everyone waive the right to sue each other in their contracts for transmission of coronavirus. It’s one less thing to worry about. 7.              Run from Red Flag Customers We’ve all experienced those red flags when meeting with potential clients. Now, more than ever, everyone is on edge. This virus has brought out the worst in some people. If something seems off, run! Better clients will come along. Good communication is key and it’s hard to communicate with customers when the relationship is strained. 8.              Include Arbitration and/or Mediation Clauses in Your Contracts Litigation is pretty much at a standstill in MA. Even when trials begin again, criminal cases will have priority. Litigation is a distraction from your business and can be extremely costly. Lawsuits should always be avoided, but now, more than ever, it’s time to seek out alternative forms of dispute resolution. Arbitration is a private process where an arbitrator acts as the judge and rules on your dispute. It is usually a binding process and the arbitration decision or award is enforceable by the courts. Mediation is a voluntary process in which parties work with a third-party neutral to try to resolve their dispute. It can be very effective in resolving conflicts. 9.              Avoid Disputes at All Costs It is always better to try to resolve disputes with owners rather than ending up in litigation. Although I have said this before, now, with the virus, lawsuits are more difficult than ever. Stress levels are heightened. There are always going to be problems that arise in construction. The important thing is how you deal with them. So, try to resolve disputes immediately. Email allows people to say things they would not say directly, so schedule an in-person meeting (socially distanced with masks) to address any issues.  10.          Check Out the New PPP Loans A new round of loans is coming. So far, I know that if you have a quarter where you earned 25% less than last year, you are eligible. Look into it! My bonus resolution: 11.          Take a Vacation! I can’t remember my last vacation. Can you? With WFH (work from home) being the norm, it can be difficult to separate work and leisure, let alone take a break altogether. For many, vacation means going somewhere else and the planning that goes along with it. So, it has been very easy to forget that we all need a break from work; even if we can’t go anywhere. Once we have the vaccine, I assume we can all start planning trips (my firsts will be to see my kids in LA, Charleston and NYC!), but before then, take some time off! You will be rested, refreshed and more productive as a result. We are all hoping that 2021 will be better than 2020. That said, we all need to continue to adjust to the new normal and adapt our businesses as the work environment changes. I wish you all a happy and healthy new year! *Andrea Goldman has launched Beyond Dispute Arbitration and Mediation Services. Contact Andrea if you are looking for an arbitrator or mediator for your construction dispute. To see my Alternative Dispute Resolution resume, click here. Send me your contracts and I will review them for free! I will then quote you a price for updating or drafting your contracts. agoldman@goldmanlg.com 617-953-3760.