Tuesday, March 23, 2010

Current Economic Environment Leads to Shoddy Work and High Receivables?

When the economy collapsed over a year ago, the construction industry when down with it. As we've all heard over the past year, much of the boom was a result of a real estate bubble that was caused by loose bank lending practices. Companies and individuals were able to get lost cost mortgages, and where able to get financing to renovate existing buildings, or build new ones. 

Now that the days of easy money are gone, the contractors that are left in business are being forced to perform work at a cost much lower than 2 years ago.  But what is the effect of these new low prices?  Has it turned the construction industry into a sort of Walmart - the goods are cheaper, but the quality is low.

In an article posted on Linkedin by Jeffrey Stern entitled The Contractor's Job is to Protect the Client, the argument is made that the low-bid environment places the contractor and client in an adversarial position, resulting in increased litigation, lower quality, excessive change orders and generally unhappy customers.

Mr. Stern's argument may be correct, but haven't customers of contractors complained about shoddy work for years? New construction has been something that people continue to look at with skepticism. So is construction worse now that contractors' margins are tighter?  The argument could be made that the economic crisis has not affected the quality of construction projects because contractors are afraid of non-payment, and are doing everything possible to ensure payment in full.

What is clear is that mechanics' lien filings are up accross the board.  Many of these lien filings are a result of banks freezing or slowing construction loan payments to commercial project owners.  When the bank freezes or slows funding, contractors have no choice but to protect their receivables and file construction liens. But that can be an expensive solution, especially when lawyers get involved.  To avoid those fees, there are lien filing services availabe, such as LienItNow.com

Since this is the first post on this blog, it might be a good idea to explain its purpose.  It is our hope to provide information on the current state of the construction industry, helpful links, news, and related discussions.  Since the blog is related to LienItNow.com, the other purpose will be to provide contractors, subcontractors, suppliers and others entitled to lien rights with information about their lien rights.  We hope the construction industry will find it to be helpful.

LienItNow.com provides lien filing services to the entire United States, and offers other services related to lien filing, such as pre-lien notices, stop notices, amendments to mechanics liens, extensions to mechanics liens, discharges of mechanics liens, pre-notices for bond claims, and bond claims.  LienItNow.com files these documents for the claimant, double checks to make sure the property upon which the lien is being filed is the correct property, and serves the documents on the appropriate parties.  All of this is done for a low, flat rate.

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