When a contractor defaults on a building project, there are no winners. The contractor, of course, has lost his livelihood, the project owner suddenly finds an often substantial investment in dire risk, construction laborers are abruptly out of work and likely missing last week’s pay check, and the shock waves reverberate down the line.
But by its nature, construction is a risky business. According to the Associated General Contractors Association, one-half of all the construction firms in business today will be out of business six years from now. Dun & Bradstreet’s Business Failure Record reports that 80,000 construction firms failed between the years of 1990 and 1997, piling up a total liability of almost $21.7 billion. Indeed, it’s entirely likely that if you’ve been in the building industry for any length of time, you may know someone or some company who has first-hand experience with contractor default — whether it be giving or receiving.