Are We Ever Going to Do Something About Slow Payment?
Everyone knows that subcontractors finance construction. Why has nothing changed in the last few years? If you look at your accounts receivable, how much is wrapped up in unpaid change orders and in retention?
ASAMW has joined forces with the National Association of Minority Contractors, DMV Chapter and the Metro DC Hispanic Contractors Association to formulate a short paper that explains the issues and what can be done. The recommendations proposed require a commitment on the part of owners to:
- Payment - Pay the general contractor seven days after a complete requisition is submitted. Require the general contractor to pay subcontractors in seven days.
- Change Orders - Owners need to manage the change order process with the same intensity as the overall project schedule.
- Retention - If a project requires a subcontractor to provide a payment and performance bond, then there will be no retainage on the project. Another consideration is if a subcontractor’s work has been accepted, then payment of retainage will be made in 30 days.
- Proper Overhead and Profit - The smaller the business the higher the overhead. A reasonable profit margin on change orders is 10%, and more than that if the changes take a long time to process.
A copy of the joint paper mentioned here is available to any member by request. Just reply to this email.
Slow Pay?
billd published a report that indicates most subcontractors know what they are doing and account for slow pay in their bids resulting in in higher revenues, larger profit margins and more. But the bigger story is that Subcontractors are waiting an average 57 days on payment while fronting for materials and labor. In this survey of 696 contractors 71% said they are slow paid by general contractors.
Economy, Delays and More, Oh My!
A few members report they are seeing more jobs put on hold than they are bidding. This article from Construction Dive indicates that there was a 36.7% jump in on-hold activity on non-public work, according to the latest Project Stress data from ConstructConnect and total construction starts dropped 6% in January, according to Dodge Construction Network. Expectations are that private work will benefit from more relaxed regulations this year while public projects struggle to find funding, according to the article.
The Census reports that spending on total new construction was $2,192.5 billion, which is 0.2 percent (±0.7 percent)* below the revised December estimate of $2,196.0 billion. The January figure is 3.3 percent (±1.3 percent) above the January 2024 estimate of $2,122.2 billion.
The Federal Reserve Beige Book indicates that for our region (Richmond) Commercial real estate activity took a slight pause as companies waited to get a clearer picture on policy changes. A Maryland agent mentioned “psychographic data is beginning to complicate buyer’s decision making.” Two Virginia agents noted office space saw a bit of an uptick as employees were slowly coming back in-person. New construction and remodel activity remained limited as costs remain high.
Cost Plus; Is it the Way to Go?
In this article, ConsensusDocs recommends Cost Plus as the way to go for owners and builders to address price uncertainty with tariffs. In cost plus (sometimes called cost of the work) the owner pays for project costs, including labor, equipment, and materials, plus a fee to the builder. How the subcontractor fares in such an arrangement depends on the wording in the subcontract.
Stop Work
Troy Brown is an attorney member of the ASA’s Chapter in Baltimore. On March 12th he led a webinar on your rights and responsibilities to stop work for non-payment, particularly in Maryland. It is worth a listen, not only to understand your rights, but also to see what is done in other areas to allow subcontractors to stop work for non-payment.
We Need Better Communication on Job Sites
Register your team to improve communication on our job sites. Whenever issues that affect your business come up, the answer always includes improved communication. Now we are doing something about it…but only if your team is registered and attends the April 29th workshop on Crew Communications. Click here for more information and to register. We hope to see a good representation of both GCs and Subs.
ASAMW Supports Metro DC Hispanic Contractors Gala
ASAMW is an association sponsor of the eighth annual MDCHCA Gala to be held on March 26th in DC. Our future industry will be highly impacted by the Hispanic community. We all are in support of their efforts to improve business competition for all subcontractors.
The Mid-Atlantic Construction Safety Conference
Registerfor the 2025 Mid-Atlantic Construction Safety Conference on April 8, 2025, at Martins Crosswinds in Greenbelt. Elizabeth McCormick, CSP decorated US Army Black Hawk Helicopter Pilot is the MACSC-2025 keynote speaker. This year’s program will include* talks on Ethics, Heat Stress, Opioids, Electrical Safety, Motor Vehicle Safety and more. Cost is $150 for attendees. Click here for details or click here to go straight to registration. There are a few sponsorship opportunities remaining.
Introducing "Blue Collar AI" — Real AI Tools You Can Actually Use
We are planning a practical session in June on AI that will help us make better use of this technology. Subcontract member Chad Gill will be leading this session. Here is what he has to say,
"AI isn't just for tech giants and Silicon Valley startups—it's transforming construction and subcontracting in simple, powerful ways, right now." For a few editions, Blue Collar AI, will introduce you to practical, easy-to-use AI applications designed specifically for subcontractors—tools and techniques you can read today and use tomorrow. Forget buzzwords and complicated tech. Each issue will highlight actionable AI tips, techniques, or tools—like instantly creating jobsite reports, streamlining contract reviews, automating safety briefs, improving follow-up efficiency, and more.
March 27, 2025 – Paradigm Contractors, LLC Meet and Greet
April 10, 2025 – ASAMW Spring Golf Tournament
April 15, 2025- Virtual SIE (Members Only)
April 29, 2025 – Communications Workshop
May 6, 2025 – Yoga & Wine with NAWIC
May 13, 2025 - Virtual SIE (Members Only)
May 29, 2025 – Annual Membership Meeting & Legislative Panel
