Ten Most Common Causes of Contractor Failure

CFMA Article written in 1986 by Robert Davidson and Danny Parrish

In a presentation to our construction industry niche group, Robert Davidson presented his top 10 list of the most common causes of contractor failure. They are as follows:

1. Poor bidding and estimating – not knowing “true job cost”
2. Growing too fast
3. Catastrophic job loss – excessive single-job risk
4. Obtaining new contracts outside of your experience, expertise or region
5. High employee turnover and inexperienced workforce
6. Inadequate capitalization and poor cash flow (not a job loss, just ran out of money – “can’t make payroll”)
7. Excessive litigation, claims, or legal issues (including safety issues)
8. Poor accounting system and job costing – bad scorekeeping!
9. Subcontractor (non-bonded) or supplier failure (price/supply)
10. Buying dumb stuff