INSIGHTS: Articles

"Better Manage the Four Types of Subcontractor Risk," Construction Executive

In an article published on August 17, 2022 in Construction Executive, Adrien Pickard outlines the four types of subcontractor risks and how to manage them.

“Subcontractor risk takes many forms,” explains Pickard. “Managing the risks is one of the central challenges faced by every general contractor.”

Pickard details the four types of risks posed by subcontractors, the obligations of the parties to the subcontract, and how those responsibilities are negotiated and put into writing. Additionally, he provides insight on the continued impacts of construction projects.

“Contractors should carefully review the force majeure clauses in their subcontracts to ensure that COVID-19 risks are properly allocated, including to specify what relief is available to the contractor and the subcontractor if shortages or material price increases are encountered,” writes Pickard. “Contractors should consider including language that specifically recognizes COVID-19 as a force majeure event and provides reasonable but limited relief to subcontractors that incentivize pre-planning and appropriate cost projection but takes into account the ongoing uncertainty with price and delivery fluctuations.”

To read the full article, please visit Construction Executive here.