Three Signs That Your Project is in Trouble

by Joy Lanzaro

Even the most reputable contractors can find themselves in financial trouble without warning. I knew of one who lost everything when his son died unexpectedly. His son’s hospital bills and funeral/burial costs became too much, and while he had every intention of maintaining high standards for his clients, he eventually lost the liquidity necessary to keep their projects running ahead of their payments. That’s why it’s such a bad idea to allow payments to get ahead of progress…no matter what. To determine if your project is in trouble, look for the following warning signs:

  • The contractor starts asking for progress payments ahead of progress, saying things like, “I need you to pay x amount of money so I can order something.” While this may be common for securing pre-fab orders like kitchen cabinets, it’s not the case with other materials. Tell your contractor you’ll only pay upon delivery and installation.
  • Different subcontractors finish another subcontractor’s work. This could mean the former subcontractor wasn’t paid for acceptable work, which indicates your contractor is having financial troubles. It could also cause trouble if that subcontractor comes after you for payment. Ask what happened to the former contractor and check if the contractor has given you a California 20-Day Preliminary Notice. A subcontractor must provide clients with a 20-day notice in order to have the right to file a lien for non-payment.
  • There’s a lack of reliability around scheduling and commitments. The contractor misses deadlines or makes promises without putting them in writing. If you have a written contract, get written change orders, too. If you want to be sure something will get done, make sure it’s in writing with a timeline and cost.