9 tips for negotiating contracts

RCS Influencers Ashley and Seth Pietsch say that a proactive approach of identifying, assessing and categorizing risks ensures projects run smoothly.

RoofersCoffeeShop® has been asking our group of industry experts how they're starting their new year. Specifically, our question to them is what strategies worked to help them stay competitive, while still profitable, last year that they plan to carry over into 2024? RCS RCS Influencers Ashley and Seth Pietsch expained what they've learned at Integrity Insurance and their suggestions about effective risk transfer strategies for other roofing contractors in 2024.

Roofing contractors navigate a dynamic landscape where risks can significantly impact project outcomes and bottom lines. In this high-stakes environment, understanding the art of contractual risk transfer is pivotal for securing successful projects. Below are some tactics for negotiating contract terms with both general contractors and your subs.

1 - Clear indemnification terms: Ensure contracts with both general contractors and subcontractors outline responsibilities and liabilities clearly, establishing indemnification clauses to protect each party against claims, damages or losses arising from their actions or negligence.  

2 - Verify insurance coverage: Request proof of comprehensive insurance coverage from both general contractors and subcontractors before starting work, including general liability, workers’ compensation and any other necessary policies.  

3 - Request additional insured status: Request to be added as an additional insured on the subcontractor’s insurance policies to extend coverage and protect your interests.  

4 - Secure hold harmless agreements: Secure agreements from the subcontractors to hold you harmless for any claims, damages or losses resulting from their actions or oversights.  

5 - Clearly allocate risks: Clearly define and allocate risks in contracts with both general contractors and subcontractors, specifying each party’s responsibilities regarding different types of risks that may arise during the project.

6 - Regular contract reviews: Advocate for periodic contract reviews and updates to adapt to changing circumstances, emerging risks or regulatory changes.

7 - Efficient dispute resolution mechanisms: Establish efficient dispute resolution procedures for conflicts that involve both general contractors and subcontractors to mitigate risks and avoid prolonged disputes.

8 - Legal counsel engagement: Consider involving legal experts in negotiations and contract drafting with both general contractors and subcontractors to ensure clauses are comprehensive, enforceable and compliant with laws.

9 - Thorough documentation practices: Maintain meticulous records of contracts, insurance certificates, communication and any contract alterations made for clarity and compliance purposes.

Contractual risk transfer is all about who is responsible if something goes wrong on the project. It’s like setting up rules before the project starts to determine who would bear responsibility in case of accidents, material defects, project delays, etc. Crafting airtight contracts that delineate responsibilities is critical. Identifying, assessing and categorizing risks upfront allows contractors to tailor insurance coverage accordingly. This proactive approach ensures that the contractual terms reflect each party’s obligations and liabilities, mitigating uncertainties and potential disputes during the project.