The Construction Contract cover art

The Construction Contract

The Construction Contract

Written by: Patricia Haywood
Listen for free

About this listen

 In this podcast we talk about how to leverage your construction contracts to drive profits and achieve sustainable cash flow.2023 Economics Leadership Management & Leadership
Episodes
  • Parent Company Guarantees in the Construction Industry

    Parent Company Guarantees in the Construction Industry
    Mar 19 2024

    Episode 9

    Summary

    In the video, Patricia discusses parent company guarantees - documents where a parent company promises to step in if their subsidiary construction company breaches a contract or goes insolvent. She notes that developers increasingly demand these guarantees upfront, seeing them as providing security, but questions whether they are really worth the hassle.

    Patricia explains what parent company guarantees are, why developers want them, and their limitations - they rely on the financial stability of the parent company and don't provide all the protections developers presume.

    She advises understanding their purpose in your contracting strategy. Patricia also covers alternatives like comfort letters if a contractor's parent company refuses to provide a guarantee, and questions whether the proliferation of guarantees helps or harms construction groups.

    Takeaways:

    1. Parent company guarantees provide a sense of security for the developer/employer, but they are not an absolute guarantee. The financial stability of the parent company is crucial - if the parent company is not financially strong, the guarantee may not be worth much.

    1. Parent company guarantees and indemnities have different purposes. Guarantees only kick in if the subsidiary defaults, while indemnities are primary obligations independent of the contract. It's important to understand the difference when drafting these agreements.

    1. If the contractor refuses to provide a parent company guarantee, alternatives like comfort letters or letters of support can provide some assurance, although they lack the legal force of a guarantee. Weighing the benefits against the challenges of obtaining a guarantee is an important part of the negotiation.

    In this episode:

    00:00:08 What are Parent Company Guarantees?

    00:00:39 Parent Company Guarantees

    00:04:19 Should you add a parent company guarantee to your contract?

    00:08:18 What is a Parent Company Guarantee?

    00:17:14 Parent Company Guarantees

    00:21:22 Parent Company Guarantee and Indemnity

    00:29:46 Democracy in the Age of Trump

    Quotes

    1. "Gone are the days when the contract would say may. We'll say an employer may ask for a parent company guarantee." - Patricia Haywood

    2. "In today's market, there is a change. People want the parent company guarantee to be executed at the same time that they execute the contract." - Patricia Haywood

    3. "I know of some developers and employers who will go far to get a parent company guarantee and I'm wondering, how far will you go? Would you pay to have a parent company give you a guarantee?" - Patricia Haywood

    Please leave a review and send Patricia some feedback on Linkedin @patriciahaywoodesq
    Show More Show Less
    34 mins
  • Being a Woman in Construction

    Being a Woman in Construction
    Mar 6 2024

    Episode 8

    In the episode, Patricia Haywood, a construction lawyer, discusses the unique challenges and opportunities she experienced as a woman in the male-dominated construction industry.

    Detailing her journey, Patricia shares how she entered the industry, the surprising scope of career opportunities in construction, and the joy and satisfaction she discovered in contributing to various projects.

    She also reflects upon the industry's issues, such as the low percentage of women in high-ranking or decision-making roles and the sexism faced by women at the workplace.

    Patricia talks about 'Women in Construction Week', a dedicated time to acknowledge and appreciate the contributions of women in the sector while also discussing necessary changes for making the environment more welcoming for women.

    Timeline

    00:00 Introduction and Women in Construction Week

    02:31 My Journey into Construction

    04:14 The Beauty and Opportunities in Construction

    05:41 My Personal Transformation through Construction

    15:13 The Challenges of Being a Woman in Construction

    18:52 The Importance of Women in Construction Week

    21:13 Conclusion and Farewell

    -

    Did you know that you can find me around the Internet?

    Go and support me here:

    Medium: https://medium.com/@patricia_10040

    Medium: https://medium.com/the-construction-contract

    Youtube: https://www.youtube.com/@TheConstructionContract

    Linkedin: https://www.linkedin.com/in/patriciahaywoodesq/

    Website: https://www.haywoodcommercial.co.uk/

    And when I am not on the Internets writing or speaking my random thoughts, you can find me in the real world living my best life over at Haywood Commercial.
    Show More Show Less
    24 mins
  • Mastering Risk Allocation in Construction Contracts

    Mastering Risk Allocation in Construction Contracts
    Mar 5 2024
    Episode 7: Patricia illuminates the pivotal role of risk management in projects of all sizes, likening risk allocation to the equitable division of a pie. She underscores the importance of ensuring each stakeholder receives a proportional slice reflective of their risk-handling capabilities. Patricia also posits that mastering risk allocation is a continuous journey of growth and adaptation, rather than an inherent skill. The episode outlines key steps for achieving balanced risk allocation, including comprehensive risk assessments, matching risks with the party best equipped to manage them, and engaging in collaborative negotiations. Patricia emphasises the need for informed decision-making, seeking expert advice, staying flexible, knowing your risk tolerance, and learning from each negotiation to enhance future contracts. The aim is to secure balanced contracts that lead to cooperative relationships and successful project outcomes. Takeaways: Mastering risk allocation in construction contracts is not an innate ability but a skill that requires continuous learning, practice, and refinement. A successful risk allocation strategy involves distributing risks according to each party's ability to manage them effectively. By ensuring that risks are assigned to the parties best equipped to handle them, construction projects can achieve more cooperative relationships, leading to better overall project outcomes. Adopting a strategic approach to risk allocation, including thorough risk assessments and aligning risks with expertise, is crucial. Collaborative negotiation, informed decision-making, and flexibility in discussions are important. This approach not only helps in achieving a balanced contract but also maintains positive relationships between parties, laying the groundwork for future project successes. In this episode: [01:02] The episode's focus is unveiled: mastering risk allocation in construction contracts to enhance profit margins and achieve sustainable cash flow, targeted at construction CEOs. [01:33] Patricia explains risk allocation using the analogy of cutting a pie, emphasising the need for a balanced distribution among contract parties. [02:00] The concept of mastery in risk allocation is introduced, stressing it as an ongoing process of improvement rather than an innate skill. [03:26] The impracticality of equal risk distribution in construction contracts is discussed, with an emphasis on tailoring risk allocation to each party's capacity. [05:11] Patricia outlines the steps for mastering risk allocation, beginning with observing and understanding the game being played in contract negotiations. [06:16] The objective of playing the negotiation game is clarified: not to win at all costs, but to achieve a balanced construction contract. [08:26] The strategic approach required for balanced risk allocation is detailed, including understanding project risks, their distribution, and negotiating collaboratively. [11:44] The necessity of a practical, not just legal, approach to risk allocation is highlighted, alongside the importance of expertise and informed decision-making. [17:25] A thorough risk assessment as the first step in balance risk allocation is discussed, emphasising the need to evaluate all potential risks and their implications. [20:31] The episode concludes with the importance of playing the negotiation game wisely and nicely to maintain relationships and achieve project success. [24:22] Patricia wraps up the episode by summarising the importance of mastering risk allocation and how Haywood Commercial can assist in navigating these challenges. Resources Haywood Commercial UK Connect with Patricia on LinkedIn Connect with Patricia via Email Quotes "I like to think [risk allocation] about it as cutting up a pie. That's how I often see it in my mind; it is a pie and we're cutting it up and we want to ensure that we give the right size pie to each party to that contract." - Patricia Haywood, Host "Mastering risk allocation in construction contracts is a process of mastery. It is something that you are doing continuously to improve. It's not something that is innate, or you just get up one day and you know how to allocate risk properly." - Patricia Haywood, Host “In business, especially in the construction business, it's all about building relationships. And so you don't want to play the game of winning at all costs. Because if you don't win, you lose. Losers come away from that game. And in business, we don't want that." - Patricia Haywood, Host
    Show More Show Less
    26 mins
No reviews yet