Tag Archives: owner financial arrangements

When the Well Runs Dry: Seven Tips for Guarding Against a Failure in Project Financing

Photo by inkknife_2000 via Flickr *

Photo by inkknife_2000 via Flickr *

Last Thursday, November 14, 2013, I participated in a webinar hosted by Engineering News-Record® on “The Five Risks You Never Saw Coming,” which is still available on-demand and free to the public on ENR’s webinar page.

The first risk addressed by the panel is the subject of this post: the risk that a private owner’s financial well might run dry.

As one of the panelists, Atlanta construction attorney Gina Vitiello (@GinaVitiello on Twitter), discussed, project funding can fail for a number of reasons.  The owner might run out of capital funds, perhaps because it overestimated the availability of project funding or underestimated the total costs of the endeavor.  Or the owner might lose its financing, for example by defaulting on its loan obligations.  Or the lending institution financing the project might fail.

No matter how or why the financial well might run dry, the consequences for the prime contractor, construction manager at risk or design-builder can be catastrophic.  What can be done to guard against this risk?

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Filed under Construction Risk Management, Contract Review & Negotiation, Feature story