Stay informed. Sign up for our weekly newsletter
and receive Chapter 1 of Markup & Profit Revisited.

Construction Programs & Results Inc

We Like to See The Good Guys Win!

Newsletter followup

by Michael Stone

A reader sent this email in response to our newsletter:

Hello Michael, thanks for the newsletter. It is always insightful and very informative.

Here is an other example of a client taking charge, I received this one last week. After a very nice brief conversation on the phone, I asked the potential client to email me his address. What he sent is below, the demands didn't sound too bad, if we were planning to build a house or an addition. Here it is:

Please could you provide:

  1. financial references from suppliers/ bank

  2. list and contact details of previous clients

  3. if and when we go further, a written quote with materials, labor, profit margins

  4. how you normally set up your payment schedule

  5. information about your insurance for worker's comp, property damage and personal liability (please provide name of insurance carrier). Also details of license.

  6. proof of universal use of lien releases


  1. how many other projects would you have going on normally at the same time?

  2. how long have you worked with your subcontractors?

  3. I may wish to visit a current site

I look forward to these answers before we move forward meaningfully. There will be various different aspects to the work required that we can discuss tomorrow.

Again, most of this doesn't sound unreasonable, until you consider the scope of the project. He contacted me to open a wall between the kitchen and the dining room in his small condo. He told me that he thought the work would take 7-10 days to complete. From our conversation, I estimated it would take about 3 weeks. He also mentioned that he had most of the subs lined up, but would like to get prices from mine, just to compare.

Boils down to a whole lot of work to bid on a 3 week project I will only get nickled and dimed on. I politely declined the meeting with him, not to waste another minute of my time.

This contractor did the right thing. I appreciate that potential clients are educated on how to make sure they aren't dealing with a flake - asking about previous clients, insurance information, etc. Now they need to be educated on how business operates - why would a contractor go to all this work just to help the homeowner get a lower price from his subs?


Maybe I've been on the contracting end too long to be objective and see things from the other side but where do some homeowners get the idea that they are entitled to things like a material list, profit margins, sub contractor costs, etc.? I suppose having all of that info will work if the homeowner is dealing with builders who fear not getting a job or who sell based on price. Who knows?

My latest potential client refused to move forward with me because he did not feel I deserved to be paid for the time I needed to spend in putting together a detailed, written proposal even though he & his wife acknowledged how much time goes into it and how much they liked me, my work and my references. His reasoning was that the re-insuarance company he works for issues proposals all the time for free. I told him I could not comment one way or the other on his company's proposal policy but I did ask him one question: Does he get paid at the end of every week from his company after he writes the proposals (whether his company is "awarded" the contract or not)? He said he did. So I pointed out to him that he doesn't work for free so why should I? He just smiled. He was speechless. He just shrugged his shoulders and said he'll get back to me after he meets with other contractors who do will give him a proposal free of charge.


subscribe now

to receive our Wednesday morning newsletter