How To Negotiate Your Security On a Construction Project
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- เผยแพร่เมื่อ 9 ก.พ. 2025
- Be secure whenever you do your construction projects! Learn how to negotiate them by watching this video!
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DISCLAIMER: The content of this video does not constitute legal advice, is not intended to be a substitute for legal advice, and can not be relied upon as such. You should seek legal advice or other professional advice in relation to any matters you or your business may have.
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Great channel 💪
Appreciate it!
NIce
Cian mate there is "time value of money" and implicit financing (please correct me on this):
(1) Bank guarantees "cost" money. because you gotta pay bank $$ which is cashing coming out.
(2) Retention i.e. the client withholds 10% on every invoice.......and that this mode is preferred. Because there is no cash outflow - i.e. you are not paying $$ to a bank as above? This reasoning sounds dubious.
I'll draw from an example using your own words to unpack why this is dubious: on another video you are say that just because you don't see a risk, doesn't mean it ain't there...... it's very similar here: Just because you don't see a cash outflow doesn't mean something isn't financed............because YOU, the sub contractor ARE THE FINANCIER!............you're implicitly financing it with both principal and interest......the question then becomes: who is better / cheaper at financing: you or the bank? THAT IS THE REAL QUESTION. because the outcome is the same.
The key thing here is it's not about risk. You are right on your comment in the last part. The risk is the risk.
The question is what is better financial decision to handle the risk. BG or Retention.
As a business rule. Cash in hand is always better. BG - you generally have to put up some collateral to the bank as way as paying up front + along the way. This money is not recoverable.
Retention is essentially loaning the money but you should get it all back. So no money out of pocket and therefore better for bottom line and cash flow.
Hopefully that makes sense.