Getting Paid—Public Works Projects Are Not Free

Local, state and national government construction projects are a great opportunity to earn publicity and polish a sense of patriotism. That said, they are often on a scale that generates a healthy profit for a winning bidder. This makes sense since constructing a hospital or school, for example, is no simple task and often comes with a great deal of paperwork.

When pursuing a public works project, our first piece of advice is to ensure your estimator is familiar with all code requirements and understands the initial proposal may be submitted free of charge. This often means the potential contractor is going to have to assume upfront costs and may not win the job. We call it the peril of plunging into public sector construction — an opportunity for significant earnings at the risk of paying for paperwork labor that may only end up in a file cabinet or in your bid results tracking database.

Our advice is to work with your estimator. There is a possibility that an estimator who has partnered with you before is willing to draft a lower-cost bid in exchange for consideration on future projects. We like to emphasize the fact that interaction at a business level is also a personal bond — it can build relationships where both parties realize gain over a longer term.

Second, when pursuing a public works project make sure you know all the paperwork steps associated with payment in full. A number of states require the contracting agency to file a Notice of Completion and demand a Reconciliation of Taxes before any final payment makes its way to your bank account. Needless to say, dotting the i’s and crossing the t’s is no small matter. Make sure your accountant or the equivalent is aware of legal requirements before plunging into such work!

Third, prompt pay and future consideration on public works mean meeting all contract stipulations within code and on time. Failure to do so can be the difference between more lucrative future contracts or a black mark next to a firm’s name at the Better Business Bureau, in newspapers and on the public ledger.

In short, public works projects are not free — for you or the taxpayer. They can, however, be an opportunity to grow your business and earn a healthy profit. Be prepared for upfront costs and delays associated with nearly all large government expenditures. We like to warn first-time participants that public works can try your patience and strain budgets, but also have the potential to be significant wins for all participants.

This is a topic we will revisit. Please subscribe to our newsletter for more valuable tips and insights.