Contractors, are you ready to get back to busy/crazy? Here are some construction statistics for 2014:
- Single family housing will grow 26 percent in dollars, corresponding to a 24 percent increase in unit starts, to 785,000.Multifamily housing will rise 11 percent in dollars and 9 percent in units.
- Commercial building will increase 17 percent, a slightly faster pace than the 15 percent gain estimated for 2013.
- Institutional building will edge up 2 percent, turning the corner after five years of decline.
- Public works construction will drop 5 percent, pulling back after a 3 percent gain in 2013 that was lifted by several large highway and bridge projects.
- Electric utility construction will retreat 33 percent, continuing the 55 percent correction estimated for 2013 that followed the current dollar high reached in 2012
With the sudden increase in activity, we.re finding more and more businesses are falling behind in the details of business management to focus on productivity and activity. This puts profitability and cash flow at risk. Two factors all businesses need to survive.
Here are a few tips to protect:
- File a NTO as a procedure, not an exception (45 days from 1st date of service)
- Monitor the pay app status with the General Contractor. Know what the cut off dates … and get your bills in early.
- Check that your Certificates of Insurance is on file with GC/and properly endorsed.
- Know the procedure for lien releases by project. Each project can have its own procedure and we’ve seen payments sit for 60+ days just waiting for a release.
- ROI: Receipt of Invoice. Call bookkeeping as soon as you send the invoice, to be sure your invoice is approved and in line for payment.
- Outsource your accounting. Maintain a low overhead and outsource your billing and receivables management while you focus on production.
- File a Construction Claim of Lien when you aren’t paid (90 days last date of service).
This isn’t matter of a good or bad relationship with the general contractor; this is a standard business practice to protect your rights and receivables. This is a great upswing in the market, and I hope you’re busy and profitable. But I would caution you and any other business owner. Please don’t mistaken busyness with profitability.
And too many times we have seen one project go bad, and an entire year of profitability is lost.