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Make Sure Your Company is Paid | The Project Contract

It’s not unusual for a general contractor or specialty contractor to have to jump through unexpected hoops in order to get paid. This can be especially true when you are dealing with a new project owner, project manager, or general contractor. Many times a contractor is forced to accept less than the bid amount in order to satisfy a customer because of ever-present “bumps in the road” during a project. Here’s how to make sure your company is paid.

The best way to make sure that you’re are paid what was agreed upon when your project is complete, is to follow the terms set out in the contract, all the time and every time.

  1. Understand the Project

    Whenever you are considering doing work for a new project owner or general contractor, ask others in the industry about their reputation. Spend some time investigating the project’s financing and if possible, learn what you can about the person controlling the purse strings.

  2. Clarify Your Bid

    Make certain your bid is clearly worded and based on fair and usual terms. Use the bidding process to set the stage for clear and concise negotiating. Instead of amending a bid, always submit a revised new bid to make sure that no terms linger that were not specifically agreed upon.

  3. Read The Contract before You Sign, And Read it Again Before Delivery

    Even when a contract appears to be standard for the industry, take the time to read every term and condition. If in doubt, ask the customer to clarify and then revise the original to include the clarifying language whenever possible.

  4. Watch Out for Risk Shifting

    Established contractors should maintain a list of provisions that created problems on past projects. Be especially careful of over-broad indemnity clauses, damages for delay clauses, and pay-if-paid clauses versus paid-when-paid clauses. If certain clauses have created problems in past projects, they’re likely to create problems in future projects. Be careful with contracts that shift more risk than necessary onto your company.

  5. Follow the Contract to The Letter

    Whatever your contract requires, just do it. Believing that there will be ways to negotiate a signed contract in your favor after-the-fact is unrealistic. Always have any changes or additions to the project added as an amendment and require your customer to sign off before you go forward.

  6. Certify that You Have Your Insurance and Bonds In Force

    Always expect your payment to be modified or withheld unless insurance and bond information has been received by your customer. If you rely on your broker to provide proper notice to your customer, always verify in writing that the information has been delivered and received by the appropriate party.

If a potential project owner or general contractor has a tarnished reputation, your friends in the industry will likely know about it. Before you bid, check your customers out just like they’ll check you out when they receive your bid. When payment is delayed or withheld, it can be financially devastating for any company; so check out new customers, read and understand the contract, follow it closely, and your payday should work out just fine.


For more information about construction contracts and insurance and bonds, call the insurance professionals at Fairbanks Insurance Brokers at (949) 595-0284 during normal business hours, or you can contact us through our website 24/7.


Fairbanks Insurance Brokers will be there for you and will do everything possible to mitigate your everyday risk of contracting with others.

Here is What We Recommend

General Liability: Contractors General Liability will be the foundation of protection for your business. The coverage will respond if you or your employees are found liable for bodily injury, property damage, or have a products/completed operations complaint. The coverage also covers defense costs for your business to respond to any lawsuits brought by a third party.

Workers’ Comp: Many states will require contractors to provide workers’ compensation coverage for their workers before they can begin a project. Accidents will happen at the job site that can result in an employee becoming injured and missing work. Your workers’ compensation coverage will provide financial assistance for medical expenses and lost wages.

Surety Bonds: It’s very likely that your state will require you to be licensed before you can begin operations. Most states and customers will require contractors to offer a license or surety bond before you are allowed to bid on a job or begin working.

Commercial Auto: Typically, most contractors will have light and heavy vehicles that require commercial auto insurance to make certain their vehicles can be repaired or replaced in the event of an accident, vandalism, or theft.

Tool Coverage: Also known as Inland Marine Insurance, this policy will provide for reimbursement for expenses to repair or replace tools and equipment. Your tools represent an important part of your livelihood, so we always encourage carpentry contractors to consider this valuable coverage.

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