Lessons Learned #14: You Have More Leverage Than You Think, Use It!

Sometimes what I see in this business makes me want to scream. I ask myself, are contractors just irrational? Is it their eternal optimism that makes them ignore common sense and act the way they do instead?

Einstein defined insanity as “doing the same thing over and over and expecting a different result.” From my point of view, the way that I see contractors manage their projects seems to fit that definition.

Before I explain myself, let me be clear and say that I’ve heard the arguments before, I get it, the business environment for contractors is very tough. Jobs are scarce, margins are extremely tight, competition is brutal. I hear this all the time; and it’s true! There is little to no leverage when negotiating a contract (especially if you’re a subcontractor). Forget about trying to negotiate good terms, you’ll be shown the door and there is a line of competitors waiting to take your place. So you end up signing the job, the way that it was presented with all the unfair clauses in your contract.

But is it smart to ignore the contract after it’s signed just because it was a raw deal that you couldn’t negotiate? Absolutely not! By ignoring the contract, you just make things worse. Once you have a signed contract to perform, you’re in a different position than you were when you were bidding to get the job. A commitment has been made by your company to perform. However, your contract, even if appears lopsided, contains some obligations that are due your company in return. Despite the unfairness of your contract, there are conditions that, when properly understood, can be used to maximize your leverage while you perform your work.

In addition, as the job progresses, your company’s value to the project should increase, as your customer realizes that there is a vested interest in keeping you on the job. Continuity of contractors is important; replacing a contractor adds time and cost to a project.

Finally, just because you have a contract that is tough on terms doesn’t mean that you don’t have any rights. Whatever fears you may have had before you signed the contract need to be discarded. You are now under contract and the rules of the game are there to be followed. In fact, if you review the contract carefully, you will find that there are rules that can be used in your favor and help to reduce the risks that you undertook when you signed your contract.

The problem as I see it is that once you are under contract to perform, you continue to believe (and behave) as if you don’t have any rights or leverage whatsoever. Problems come and go, affecting your work, adding cost and time – yet you fail to provide proper notice or to exercise your rights in accordance with your contract. Oh, you might write some emails to complain or bring your objections up in conversation, but rarely do you follow the requirements (the “rules”) of the contract.

You need to realize that you can’t be terminated for doing what the contract requires you to do. Yet, time and again, there is a failure to document the issues properly. Later, after the project is nearly complete, and all of the damage has been done, you begin the scramble, looking for ways to recover what you can in what will usually be a severe uphill struggle because of your failure to follow the rules and do what you should have done.

The lesson to be learned: Don’t ignore the “rules” in the contract once it has been signed. Learn how to use them to your advantage to lower your risk and improve your profit.

“Insanity: doing the same thing over and over again and expecting different results” – Albert Einstein

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