OVERVIEW

For most business owners, legal and insurance matters are the least fun part of doing business. Many of us literally avoid spending time looking at our contracts and insurance policies because the minutiae are tedious, dry, and intimidating.

In some circles in the construction industry, the word contract is even considered a dirty word. I often hear seasoned construction executives talk nostalgically about the good old days when "deals were done on a handshake." Many contractors still believe today that, once the contract is signed, it should be set aside as a mere formality and not spoken of again with the customer.

The reality is that construction is one of the most dangerous businesses around; even if you do everything right, you still run the risk of losses and even business failure because of contractual disputes, accidents and injuries on the job, and damage to property. By not confronting the details of your agreements and policies and by tiptoeing around the customer on contractual issues, you risk shooting yourself in the foot, or worse.

In Chapter 7, we talked about how we can manage construction risks by implementing smart project management strategies and procedures. In this chapter, I'll provide an overview of ways to limit your legal risks by actively managing your contracts, regulating job site safety and security, and protecting yourself from personal liability.

MANAGING YOUR CONTRACTUAL RISK

The construction contract is the game plan for the entire construction process. It determines what the project is, how...