Our industry can be rewarding, but those rewards come with risk. Taking on those risks comes with a price. Earning adequate margins for work is a fundamental practice that should not be set aside in tough times. With less work available and continued pressure on margins, sometimes the most prudent course of action is walking away from a bad or unprofitable project. 

The most important element these decisions strain is a firm’s liquidity. A firm’s liquid capacity and ready access to cash is critical to working through a problem and continuing to succeed after it is resolved. Simply put, liquidity allows for the flexibility to overcome pitfalls that may present themselves, as well as the comfort to make decisions that benefit the company.

Today’s environment has merely brought to the forefront many troubling aspects for our industry. As such, this environment has also caused contractors to consider deviations from their core competencies. 

Each of these decisions is usually made with the best of intentions, but they can place additional stress on a firm's capacity. At a time when many companies’ financial depth and internal capabilities have already been tested, additional strains may prove too much to overcome.

Brian M. Perry is a principal in the Construction Services Practice of Atlanta-based Sterling Risk Advisors.