Cash Flow Tip 3 - Contractual Details Matter

The reason we are commonly called contractors is because we work off of a contract that defines the scope and terms of what we build.

D. Brown Management Profile Picture
Share

The act of building is simply a subset of contracting; not the other way around.  

Cash Flow: Tip 3 Contractual Details Matter

Negotiating then managing every aspect of the contract including the building of the project is what defines leading contractors and project teams. 

This starts with all leadership and key project team members knowing contractual terms deeply including how they impact risk including cash flow.  

  • On a scale of 0-10 how would you rate the contract knowledge of your project team?

The next step is being able to negotiate terms effectively both getting critical items in the contract setting a minimum standard then negotiating throughout the project getting those minimums exceeded.  

We have watched two PMs from two nearly identical contractors working for the same public agency negotiate very different T&M rates and billing cycles.  One PM got 17% higher rates AND got 2 week billing cycles. The other PM accepted the “standard” laid out in the original contract.  

  • On a scale of 0-10 how would you rate the average negotiating ability of your team?

Construction law, contract management and negotiating are as trainable as bending conduit.  How much have you invested in teaching your project team these skills? What could the return be worth?


RESOURCES:

Never Split the Difference

Secrets of Power Negotiating

We are revamping our publicly available cash flow workshop that includes these 18 tactics that contractors can use to accelerate cash flow. Stay informed of updates on release.


Cash Flow
Great cash flow is a key driver of valuation and successful successions. Running out of cash is is the #1 reason contractors fail. Improving cash flow improves your Return on Equity. Protect yourself and never let cash flow be the limitation to your profitable growth....

Cash Flow
Great cash flow is a key driver of valuation and successful successions. Running out of cash is is the #1 reason contractors fail. Improving cash flow improves your Return on Equity. Protect yourself and never let cash flow be the limitation to your profitable growth....

Leveraging Geographic Expansion for Leadership Development
Geographic expansion is impacting all contractors whether it is major customers pulling them into new markets, new competition coming into their “hometown” or as a proactive strategic growth move by the contractor.
Succession - There is No One Best Way
As systems become more complex (or V.U.C.A.), such as operating a company or succession planning, there is not a single “One Best Way” that will work in all situations.
Cash Flow Tip 2 - Winning and Building the Right Mix and Velocity of Projects
It seems obvious but the first thing you must do is consistently build projects that meet or exceed your budgeted profit expectations.