10 WARNING SIGNS TO WATCH OUT FOR IN A CONTRACTOR

WARNING SIGNS TO WATCH OUT FOR IN A CONTRACTOR

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The following are some of the warning signs in a contractor that must never be ignored;

1. Unwilling to get into a written agreement;
Agreement outlines specific costs for labor and material, project delivery timelines, and payment terms among other important aspects. A contractor that avoids written agreements is likely to be non-committal to fulfil required obligations.

2. Unable to produce registration or licensure documents;
Registration with bodies such as Registrar of Companies, Kenya Revenue Authority, National Construction Authority, and Relevant Government Ministries among others is intended to protect the public by verifying the contractor’s professional standing hence assist in establishing reputation. A contractor that is unable to produce these documents is likely to have questionable operations.

3. Unable to demonstrate methodologies for execution of the works;
Methods of constructing a project are important for the planning and executing site operations. A contractor that is unable to demonstrate proper construction methodologies is likely to mismanage the project.

4. Unable to provide adequate portfolio and/or references;
Portfolios and references provide highlights and showcase samples of relevant works that have been successfully delivered. A contractor that is unable to provide a portfolio or references may be lacking capacity to deliver the project and the history of non-performance may not be verified.

5. Demands large percentage of cash only down-payments;
Down-payment is payment made in good faith for purchase of long lead items or as a show of commitment to the project and typically range from 10% of the full contract price. A contractor that requests for large cash only down-payments is likely to be non-committal to the performance of the contract.

6. Avoids or is slow to written correspondences;
Written correspondence offers records for future reference that is legally valid. A contractor that avoids written correspondence is likely to be incompetent or intentionally non-committal to the successful delivery of the project.

7. Unwilling to issue a performance security and/or all risk insurance including third party liability;
Performance security is a financial guarantee that protects against non-performance of the contractor while all risk insurance protects the contractor against financial liability due to property damage and injuries. A contractor that is unwilling to issue performance security and/or risk insurance when required is likely to be non-committal to fulfilling required obligations.

8. Unwilling to provide CVs for key technical staff for verification;
CVs outlines the relevant work experience, skills and academic qualifications for key technical staff. A contractor that is unwilling to provide CVs for the key staff may be lacking qualified staff for the successful delivery of a project.

9. Unable to provide financial standing including the projected cash flows when required;
Financial standing and projected cash flows outlines the available cash for successful completion of the project. A contractor that is unable to provide cash flow documents may lack the ability finance the expenditures associated with labor wages, purchase of material and supplies, and project operations among others.

10. Unable to provide documents of owned equipment and/or agreements with equipment suppliers;
Equipment makes the construction works to be executed faster and in a more efficient manner. A contractor that is unable to provide a list of owned equipment or pre-arranged agreements with equipment suppliers may lack capacity to deliver projects on time and of desired quality.

Published by Geostruct (May 31, 2023)