Pete Fowler, president of Pete Fowler Construction Services, specializes in risk management and liability on new construction projects. At the 2018 NGMA Spring Meeting, Fowler spoke to attendees about how to best manage risk and successfully complete a greenhouse build.
In this Q&A, Fowler talks about some of the main risks businesses face in construction, how contractors and end consumers can stay on the same page and more.
Greenhouse Management: When you are consulting with a new client, be it a greenhouse operator or a greenhouse manufacturer working with a business owner, what are some of the main risks they should be aware of when starting a new project?
Pete Fowler: The most common risk [for greenhouse manufacturers] is not charging enough and then going out of business — so it starts there. That’s what we could call speculative risk. And then there are other typical risks like floods and fires that you can generally have insurance for, but you have to make sure. And then there are indirect risks like defect allegations or somebody else’s employee coming to your property and getting hurt in or around your job site and blaming you. Lots of the NGMA guys — the actual greenhouse manufacturers themselves — are sometimes contracting for not only the physical components of the greenhouse, but they are also finding a contractor or local crews to erect those structures and they are selling a complete greenhouse. Naturally, the people you hire to erect [the greenhouse] have varying levels of sophistication, so I would call that one of the most direct risks in the whole process. If you hire a third party to erect the product you’ve manufactured — say a greenhouse — you’re guaranteeing their work, whether you like it not.
"All of this should happen before a hammer is swung on site. All of this is being built on paper before it’s done in the real world.” – Pete Fowler
Some of the documents that NGMA members are signing are signing away their lives. It’s all fine and dandy if it works out. But if it doesn’t work out great — because of the onerousness of the contracts they signed — all of the liability falls on the shoulders of the person that signed that contract, not the contractor who drew up the contract.
GM: What are the most common mistakes people organizing construction projects make that are avoidable and cause issues later on?
PF: No. 1, [business owners] sign contracts they don’t understand and they should never do that. It’s a very, very dangerous game and if somebody is asking you to sign a contract you don’t understand and you don’t have the resources to hire someone to explain it to you, you don’t ask the person who wrote the contract to explain it to you. You have to get someone else who understands to know very clearly what is being bought and sold. If you are contracting or buying from another entity, you need to understand the risks and manage the risks with contracts and insurance. What they need to do is have a process to make sure whatever is being bought and sold is clearly defined and understood. Have a schedule, know what it’s going to cost. All of this should happen before a hammer is swung on site. All of this is being built on paper before it’s done in the real world.
GM: What advice would you give to a greenhouse grower hiring a contractor for a build?
PF: Normally what happens is someone says, “I’d like a greenhouse, please. I’d like it to be about 40 feet by 100 feet,”’ and it feels like there are 10,000 options. So you call three greenhouse manufacturers and say the same thing to all of them. One guy gives a proposal for a Bentley, the other guy gives you a proposal for a Yugo and the person in-between gives you a proposal for a Chevy. How are you supposed to choose?
Every project has people at varying levels of sophistication in every role. It’s best if everyone is very sophisticated and we don’t have a ton of litigation, or terrible problems. When everyone is very sophisticated in the contracting, the risk management and the procurement of insurance, when problems happen, they don’t cause grave harm to any of the entities. All of the risks are managed actively and proactively. It’s when you end up with folks in the stream of commerce that are not sophisticated that you have problems. Understand who you are going into business with.
GM: When you are looking at coordinating work between parties, and defining a schedule and a budget and all of these different factors, what can the greenhouse owner buying a new greenhouse and contractor do to make sure they are on the same page the entire time?
PF: I think virtually everything should be in the contract. If you’re going to spend $5,000, then you’re going to want to do some due diligence. If you’re going to spend $500,000 or $5 million, it’s very different. The appropriate amount of risk management depends on the potential risks and if the potential risk if $5,000, you don’t want to pay your lawyer and your insurance broker $10,000. If the potential downside is $500,000 or $5 million, then you need to be very explicit about engineering backward from a successful contract completion.