Learn best practice procedures for prequalifying subcontractors and managing subcontractor default risk.
Like a chain, a construction team is no stronger than its weakest link. In these uncertain times of increased demand for construction, stretched backlogs, labor shortages, and cost escalations, the risk of subcontractor default is at an all-time high. Subcontractor default is the weak link that can turn an otherwise successful project into an utter failure overnight. This presentation will help people responsible for entering into and administering subcontracts to recognize the causes and telltale signs of high-risk subcontractors early in the constructive process. In some cases, default can be avoided by simply subcontracting with a different subcontractor. In other cases, proactive measures can be taken to avoid or mitigate the effect of terminating a high-risk subcontractor. This topic will explore some of the options available to general contractors, construction managers, and upper-tier subcontractors to avoid the project-destroying effect of subcontractor default.
Learning Objectives
- You will be able to describe the common causes of subcontract defaults.
- You will be able to identify the signs of impending subcontractor default.
- You will be able to explain the available options to avoid subcontractor default.
- You will be able to discuss effective plans to avoid subcontractor default.
68 minutes
Course Exam
Certificate of Completion
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Agenda
Introduction
- Overview
- What Is a Default?
Common Causes of Subcontractor Default
- Cash Flow Problems
- Too Much Work, Too Little Time
- Project Complexity and Inexperience
- Bid Busts and Defects
- Labor Shortages and Other Outside Factors
Early Warning Signs of High-Risk Subcontractors
- Effective Prequalification
- Performance Clues
Default Avoidance
- Effective Subcontract Terms
- Proactive Project Management
- Cure Notices
- Supplementation
- De-Scoping
- Mitigating Impact of Termination
Security
- Performance Bonds
- Default Insurance
- Other Forms of Security
Conclusion
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Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Credits
OnDemand Course
Applications have not yet been submitted for Delaware, Idaho, Kentucky, Maine, Oklahoma, South Carolina, and Wyoming CLE for this course. However, if you are interested in obtaining CLE for any of the listed states or have any additional credit questions please email us at [email protected] or call us at 866-352-9540.
This course was last revised on May 31, 2023.
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To earn each credit Lorman offers through the OnDemand learning platform, you need to watch 100% of the program. Also, for certain credits you will need to fulfill additional requirements which will be displayed on the "credits" tab when viewing the course.
This program does NOT qualify, nor meet the National Standard for NASBA accreditation.
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Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Faculty
Scott D. Cahalan
Smith, Gambrell & Russell, LLP
- Partner in the construction law and international arbitration sections of Smith, Gambrell and Russell, LLP, an AmLaw 200 firm
- Part-time instructor of Construction and Development Law at the Georgia Institute of Technology
- General counsel to the Georgia Utility Contractor’s Association
- Worked as an engineer for an ENR® top 50 general contractor
- Drafted form contracts for the Associated Owners and Developers, a national association
- Recognized by Chambers USA, The Best Lawyers in America, and Georgia Super Lawyers
- Frequent author and lecturer on construction law
- Member of the State Bar of Georgia, Northern District of Georgia, and 11th Circuit Court of Appeals
- J.D., cum laude, from University of Georgia; B.S. in construction engineering from Iowa State University
- Can be contacted at [email protected], [email protected], and (404) 815-3711
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