The Pros and Cons of Becoming a Specialty Contractor
According to Engineering News-Record’s (ENR’s) 2019 Top 600 Specialty Contractors list, specialty contractors generated $135.20 billion in 2018 — a 103.9 percent increase since 2011. There is clearly money to be made by finding your niche in the industry. However, where there is reward, there is always risk, and contractors can encounter a number of new challenges by focusing on a specialty.
Below, a Jacksonville construction lawyer with Cotney Attorneys & Consultants discusses the pros and cons of becoming a specialty contractor. We’ll also share a little insight that will hopefully help you avoid some of the growing pains that have plagued other subcontractors.
Con: The Future Is Uncertain
There have been rumblings of a recession for quite some time, and it’s only recently that economists began predicting that the U.S. will avoid a recession in 2020. Despite this growing optimism, it’s clear that the incredible growth the industry is experiencing is unsustainable. It remains to be seen whether or not this growth will continue in the coming years; however, this shouldn’t deter construction companies from finding their niche and profiting from it.
Pro: An Opportunity to Build Relationships
Strong business relationships are of paramount importance if you are considering becoming a specialty contractor. Unfortunately, many construction companies wait until they’re facing bankruptcy to consider altering their services or partnering with another company. For assistance with corporate transactions, including mergers and acquisitions, our Jacksonville construction lawyers can always help.
We always recommend being proactive when it comes to protecting your business. You can do this through partnerships that allow you to expand your business offerings, thereby protecting your company regardless of how the economy turns out. But watch out! expanding into areas beyond your comfort zone can have the unintended consequence of hurting your business. Always consult a knowledgeable attorney before making moves like these.
Con: The Labor Shortage Isn’t Going Anywhere
If it makes you feel any better, the vast majority of construction companies are being impacted by staff shortages. In fact, of the 600 contractors surveyed by ENR, the majority responded that they had experienced labor shortages. This can create tension between general contractors and subcontractors who are unable to do their best work as a result of a lack of manpower. Delays and disputes are bound to happen when all parties are struggling at skilled positions. This further highlights why fostering business relationships is so important in the construction industry.
Pro: Collaboration Is Taking Center Stage
With the move towards specialty contracting, there has been a move towards alternative project delivery systems, such as design-build and integrated project delivery (IPD) contracts. Construction is all about collaboration. By employing these types of contracts, you can ensure that your company is involved in a project from the very beginning. This is advantageous for a number of reasons, including the opportunity to draw on the experience of multiple parties. But as with all contracts, there are precautions that must be taken:
- Risk should be allocated fairly among all parties.
- All parties should be experienced to reduce risk and ensure that the failings of one party does not doom the others.
- Your contract should be free from all the trappings of inadequacy — unclear language, poorly defined scope of work, etc.
A Jacksonville contractor lawyer can help with all this and more.
Con: Remaining Compliant Will Be a Challenge
Regardless of the niche you move into, you will have to remain compliant with local, state, and federal laws. This is especially challenging for construction companies that elect to tackle public projects, such as school construction. Contractors who are used to doing things their way must now abide by additional affirmative action, wage, and bidding requirements, among other rules and regulations. This can be devastating for construction companies just getting started in a new and exciting market. In order to remain compliant with any and all laws that pertain to your projects, we suggest partnering with a Jacksonville construction attorney.
Pro: There’s Money to Be Made
For many contractors out there, this pro will trump all others, and for good reason — ENR curated a list of 600 specialty contractors that were able to turn focus into profit. But while there is a clear opportunity for companies to find their niche in the industry, they must still be mindful of the numerous pitfalls that plague both contractors and subcontractors.
At Cotney Attorneys & Consultants, our attorneys can assist your company with a number of the issues mentioned throughout this article and more. A Jacksonville construction attorney can draft and review contracts to ensure that conflict is avoided, represent your company to resolve conflict, and provide sound legal advice to ensure that your company remains lawful while it transitions into its niche. For a legal partner who will champion your company’s success and growth, partner with the team of lawyers from Cotney Attorneys & Consultants.
If you would like to speak with one of our Jacksonville construction attorneys, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.