A contractor who's reviewed over 7,000 contracts warns subcontractors that skipping negotiation leaves them vulnerable to exploitation. Properly negotiating terms can boost profit margins by 10-15%, and relying on personal relationships fails when project personnel change.
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Skipping negotiating your terms as a subcontractor doesn't make you easy to deal with. It makes you the easiest person to take advantage of. Over 7,000 contract reviews that we've done and over 400 subcontractors that we've worked with, it's always the subcontractors who say that, oh, I don't bother to negotiate the contracts. They're the ones that get done over when eventually something bad happens. They try and rely on relationships, and then eventually when the relationships break down, because relationships, you know, On construction projects, it's not that relationships actually break down. What actually happens is they go missing. The person that you're dealing with moves to another project. Someone else comes in and says, hey, I just got to rely on the contract because I've not been here. And then that's what ultimately happens. And then they rely on the contract. You didn't bother to negotiate your contract, and ultimately you lose out. So you've got to negotiate your contract as a subcontractor. It makes a huge difference. Ultimately, it's about 10% to 15% more margin if you do.