There’s no end to the issues that can lead to a stalled construction project. Many of these issues are sure to be beyond your control. However, many more can be mitigated with proper planning, expert contract drafting, and legal aid. We’re picking up where we left off in part one with our discussion on the causes of a stalled construction project. All of the below causes can be avoided with a clear, concise contract drafted by a Houston contractor attorney from Cotney Law.
Cash Flow Issues
It’s not abnormal for contractors to invest large sums of money into a project before seeing a profit. Contractors can leave themselves spread thin by essentially gambling on a project’s success. When a general contractor experiences cash flow issues, it can trickle down the construction hierarchy and stall subcontractors beneath them. In order to avoid cash flow issues, it is imperative that contractors accurately bid on projects. Failure to do so could result in your company being bound to an erroneous bid amount. In which case, you’ll require the aid of a Houston contractor attorney.
Any number of reasons can lead to project costs growing beyond what an owner and project manager envisioned. Either initial estimates were inaccurate or the scope of work gradually grew and changed as the project proceeded. If the scope of work has been altered, it could be because the owner requested alterations or unforeseen circumstances caused delays. An owner may try to pull the plug on a project they deem to be growing out of control. This is why contract drafting is the most important stage of a construction project. A properly drafted contract can outline goals and costs and temper expectations before a legal dispute erupts. Contact us if you wish to have your contracts reviewed by a Houston contractor attorney.
Financing Runs Out
We’ve arrived at the main reason why construction projects stall. There’s very little that can be done if an owner runs out of money. However, there are reliable ways to mitigate the risk of owner bankruptcy. To begin with, no owner intentionally signs up for a project they believe to be outside their price range. For this reason, communication must be maintained throughout the construction process to inform the owner of any unexpected expenses or delays. As with the above topic, the best way to mitigate this issue is to have the project adequately outlined in the contract. But this can only be guaranteed with the aid of an attorney.
Keep an Experienced Attorney Involved
Throughout this series, we’ve brought up numerous reasons why a construction project may stall. While some of them may seem beyond your control, you can lessen the impact if not outright avoid many of them by properly drafting and reviewing contracts. To ensure that your company is consistently in the best position to succeed, we recommend looking at our subscription plans. From conception to project completion and beyond, you can rest easy knowing that your contracts have the seal of approval from the Houston contractor attorneys at Cotney Law.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.