“The margins have never been shorter and tighter, making it easy to find yourself in financial trouble. You can’t even trust the solvency of a surety and whether a public owner has the project appropriation. Sometimes, public owners are trying to leverage money they don’t have,” Perlberg says.

Yet, contractors still hesitate to modify or request contract changes from owners due to rocky market conditions and initial excitement and gratitude over winning work, says Frank Riggs, co-chair of Atlanta-based Troutman Sanders LLP’s Construction Practice Group.

Slippery contract language, owner retainage, and pass-through damages contributed to a 22.8% construction industry operating loss ratio in 2012, says Lawrence Mitchell, chief underwriting officer for Travelers Bond Construction Services’ Western Region.

However, contractors can protect payment rights through owner prequalification, direct lender communication and careful review of project contract terms, including risk-shifting language such as pay‐if‐paid clauses, no‐damages‐for owner delays and overly‐broad lien waiver forms.

“Banks have tighter control over lending authority, and contractor competition is still very fierce,” Riggs says. “It’s important to protect yourself and RTFC: Read The Freaking Contract.”