Liquidated Damages in Construction

By Michael Stone – (Sep 15, 2021)

When customers start talking about liquidated damages in construction, it’s time to ask why.

Contracts Matter; Collecting Final Payment

By Michael Stone – (Sep 1, 2021)

When you provide a dishonest client a cost breakdown of their job, things can go wrong.

Rapidly Increasing Material Costs

By Michael Stone – (Mar 3, 2021)

Quoting a firm fixed price is riskier when material costs are increasing rapidly, which is why your contract needs to address unexpected material cost increases.

Wrapping Up a Difficult Project

By Michael Stone – (Jan 20, 2021)

It can a challenge to finish a project, especially when it was priced too low for a difficult client and with a weak contract.

Why Do You Need a Written Construction Contract?

By Michael Stone – (Nov 11, 2020)

Almost all conflicts contractors face could be avoided or quickly resolved if there is a clear, detailed construction contract between the parties.

The Skinny on Change Work Orders

By Michael Stone – (Sep 2, 2020)

A compendium on change work orders on a new home, remodeling or renovation project; why they matter, how to price them, what to include, and more.

Cost Plus Contracts

By Michael Stone – (Jun 5, 2020)

Why cost plus and time & material contracts should be avoided, for both contractors and building owners.

Unclear Change Work Orders

By Michael Stone – (Feb 19, 2020)

Pricing changes for a change work order isn’t easy when the scope of work isn’t clear.

Time and Material Woes

By Michael Stone – (Feb 5, 2020)

Time and Material contracts are full of risk, especially on larger jobs.

Business or Charity?

By Michael Stone – (Jan 8, 2020)

If you’re a business owner and take on a project out of the goodness of your heart, recognize you might not get paid and will be funding the project.

Payment Methods

By Michael Stone – (Dec 11, 2019)

I don’t think writing a check is old fashioned, but there are so many advantages to using a credit or debit card that it’s become the preferred payment method for many.

Protect Your Time

By Michael Stone – (Nov 20, 2019)

Some people are used to snapping their fingers and having others jump. It’s irritating, but you have to remember that they’re writing the checks.

Clear Sales Communication; It’s Your Responsibility

By Michael Stone – (Nov 13, 2019)

I want to share a recent phone conversation with a contractor concerning a problem they were having with a client.

Protecting Yourself from the Protector

By Michael Stone – (Oct 2, 2019)

I’m not a fan of working with government agencies, but some situations are unique.

Final Payments and Guarantees

By Michael Stone – (Sep 25, 2019)

When clients try to change the terms of the contract, you don’t have to go along.

Contract Language That Puts You at Risk

By Michael Stone – (May 21, 2019)

Over the years, I’ve seen contract language evolve, shifting more and more responsibility to general and specialty contractors.

Handyman vs Service Agreement

By Michael Stone – (Apr 24, 2019)

Is it a good idea to have a service agreement to cover small jobs under a certain amount?

Protect Your Business – Get Paid

By Michael Stone – (Feb 13, 2019)

Avoid losing money by recognizing some of the games that building owners play to avoid paying.

Protect Your Business – Change Work Orders

By Michael Stone – (Feb 6, 2019)

Michael discusses a ploy some building owners use to not pay for all of their change work orders. It happens in both residential and commercial projects.

Overhead and Profit on Change Orders

By Michael Stone – (Jan 9, 2019)

You shouldn’t sign a contract that stipulates what you can charge, even if it’s just on the change orders.

Design Agreements Gone Awry

By Michael Stone – (Dec 12, 2018)

We discussed design agreements last week; today we’re going to look at them from another angle. The first step is setting the budget with the client.

Protecting Design Work

By Michael Stone – (Dec 5, 2018)

A contractor who has designed projects asked how to protect his design work.

Dodging Payment

By Michael Stone – (Oct 9, 2018)

There are things you can and should do when a client tries to dodge making payments.

Pricing Handyman and Service Work

By Michael Stone – (Apr 11, 2018)

There are two schools of thought on pricing handyman projects and service work: T&M or flat rate pricing. They both have advantages and disadvantages.

Quality Standards

By Michael Stone – (Mar 14, 2018)

“Let’s see what the contract says about that.”

Dishonest Clients

By Michael Stone – (Feb 21, 2018)

We often hear from contractors dealing with a client who, for whatever reason, has decided to change the terms of their contract. Other professionals have the same problem.

Collecting Payment from a Dishonest Homeowner – Updated

By Michael Stone – (Sep 20, 2017)

Not all of your clients are honest. There are even a few who have no intention of paying you for the work you do.

Cost Plus with a “Not to Exceed”

By Michael Stone – (Apr 26, 2017)

A contractor asked for my opinion on a request he recently received. It’s not a win-win proposition.

Let Them Know What to Expect

By Michael Stone – (Apr 5, 2017)

If you’re doing service work, make sure your client knows what to expect before you start.

Cancelled Design Agreements

By Michael Stone – (Mar 29, 2017)

A call came in from a friend recently. It seems that a client of his wants to cancel a signed design agreement.

Clients Changing the Contract

By Michael Stone – (Mar 8, 2017)

I’ve written before about clients who decide to make changes to a contract. Last week I heard from two different contractors who had to deal with this, and I want to share their stories.

Mediation or Arbitration?

By Michael Stone – (Jan 11, 2017)

Your contract should call for arbitration, not mediation, to settle disputes.

Client Causing Job Delays

By Michael Stone – (Oct 19, 2016)

If you want to lose money on a job, agree to let your client do part of the job or provide their own materials without setting clear boundaries.

Right of Rescission

By Michael Stone – (Oct 5, 2016)

When I’m working with a group of contractors, I often ask how many are providing a Right of Rescission form with their contracts. Many contractors aren’t even aware of the document or realize its importance.

Construction Allowances: What They Are, How to Use Them

By Michael Stone – (Jul 27, 2016)

A construction allowance is a dollar amount included in the contract for a particular item. There are two types of construction allowances: material and installed.

Clients Wanting Cost Plus

By Michael Stone – (Feb 3, 2016)

Many building owners want a Cost Plus contract because they believe they’ll have more control over the total cost of the project. It’s your job to educate them on the downside.

Maintaining Your Right to Lien

By Michael Stone – (Jan 20, 2016)

At least once a week I hear from someone who can’t get paid for work they’ve done.

Documenting Jobs

By Michael Stone – (Nov 18, 2015)

There are two benefits to documenting your jobs. One is protecting yourself in case there is a disagreement about the project. The other is providing information that will help you when you’re promoting your business.

Itemization Woes

By Michael Stone – (Nov 11, 2015)

We’d like to share an email received from an anonymous homeowner. If you believe that it’s smart to provide an itemized invoice, this will make you reconsider.

Payment Schedules on Small Jobs

By Michael Stone – (Feb 18, 2015)

It’s important to manage the payment schedule on your jobs, but not all jobs are the same.

Design Agreement Contract, Letter of Intent

By Michael Stone – (Nov 6, 2014)

A design agreement allows you to get paid for your work. Don’t waste your effort or your time.

A Few More Contract Issues

By Michael Stone – (Oct 29, 2014)

Retainage clauses, removing the finance charge clause on the last payment, “we’ll pay you when we get paid”.  

Contract Language for Client-Caused Damage

By Michael Stone – (Oct 22, 2014)

What do you do when a client calls about a problem they created? Preventative measures make the difference between a profitable job and losses.

Business Protection for Contractors

By Michael Stone – (Oct 8, 2014)

The popular belief is that contractors are the villains and homeowners are the victims.  But if you’ve worked with the public for very long you know there are also dishonest clients.

Final Payments, Emailed Quotes

By Michael Stone – (Oct 1, 2014)

Never let your final payment exceed 2% of the sales price. And your contract should include a finance charge clause for payments not made on time.

Progress Payments: Keeping a Positive Cash Flow

By Michael Stone – (Sep 24, 2014)

We used to get three payments on jobs. 1/3, 1/3, 1/3. That’s not a smart business practice.

Money Changing Hands

By Michael Stone – (Sep 18, 2014)

It's easy to ask someone to do something; it's harder to hand over money. Your client isn't committed until they've written the first check.

Getting Paid

By Michael Stone – (Jun 11, 2014)

If the payment schedule is adjusted after you’ve started a job and they aren’t willing to pay what’s owed, file liens. You must protect your right to be paid.

When Clients Do an End Run

By Michael Stone – (May 28, 2014)

Stay ahead of your clients. Write a detailed contract that protects you from as many unpleasant scenarios as possible, and work from written agreements with both your subcontractors and your employees. 

Contracts, Change Work Orders, Punch Lists and More

By Michael Stone – (Feb 26, 2014)

A selection of issues that should be written into every contract to protect your profitability.

Contracts to Avoid

By Michael Stone – (Feb 5, 2014)

If you are going to deviate from a standard fixed price contract, look at your approach from your client’s point of view. Make sure they know what to expect and what you’ll do.

Contract Commitment Language

By Michael Stone – (Jan 30, 2014)

Commitment language in your contracts, payment schedules that help cash flow, right of rescission language. With a few extra comments.

Contracts – Dates, Times, Conferences

By Michael Stone – (Jan 22, 2014)

Many construction-related disputes can be avoided with a well written contract. Here are a few of the things that need to be included.

We Want To See Your Receipts

By Michael Stone – (Oct 2, 2013)

What if you agreed on a price, now customer wants all receipts for material? Without a clearly written fixed price contract, it's a problem waiting to happen.

A Poorly Written Contract Will Cost You Money

By Michael Stone – (Jul 24, 2013)

Too many contractors use a poorly-written construction contract, or no contract at all, leading to different interpretations of an issue.

Specifics on Change Work Orders

By Michael Stone – (May 1, 2013)

Last week we discussed having signed Change Work Orders (or Additional Work Orders). Today we’ll discuss 4 mistakes often made when writing Change Work Orders.

Every Little item

By Michael Stone – (Feb 20, 2013)

An example of what transparency does for your business. If clients want the details (i.e., itemization), then provide those details but charge for them.

Contract Cancellations

By Michael Stone – (Sep 17, 2012)

Cancellations happen, even with the best of salespeople. Clients have all kinds of reasons to cancel an agreement, and you need to be prepared.

A Complete Contract

By Michael Stone – (Aug 27, 2012)

I’ve talked about the need for a contract, and the importance of a clear payment schedule, because without a well-written, clear contract, you’re headed for trouble.

Payment Schedules for Cash Flow

By Michael Stone – (Aug 22, 2012)

A good payment schedule keeps you paid for the work you are doing. If you're using a 1/3, 1/3 and 1/3 schedule, you are financing most of the job out of your pocket.

Cost Plus – A Homeowner’s View

By Michael Stone – (May 15, 2012)

A very nice gentleman called me last Friday. He related a story about his home remodeling project. It was done a Cost Plus job, the "plus" was negotiated at 18%.

Use the Right Payment Schedule

By Michael Stone – (Sep 13, 2011)

If you want positive cash flow in your construction business, make sure you're using the right payment schedule on your contracts.

Sending Invoices for Construction or Handyman Work

By Michael Stone – (May 16, 2011)

Invoicing is one way clients delay paying. "Thanks for doing that work, send me an invoice, okay?" Why do contractors agree? Maybe they believe everyone does it.

Asking for a Lien Release Prior to Payment

By Michael Stone – (Mar 15, 2011)

A specialty contractor said, "A general contractor called and asked me to send a lien release. If I do that, he will send a check for what he owes me."

Construction Insurance Repair Job That Could Have Gone Bad

By Michael Stone – (Jun 29, 2010)

A friend was doing an insurance job, repairs to an exterior wall. The siding had been improperly installed, and around here, if you don't keep water out you'll see rot.

Do Construction Jobs Have a Life Expectancy?

By Michael Stone – (Feb 17, 2010)

Does a job have a “life expectancy”? I believe it does and you should be aware of the warning signs.

A Homeowner’s Point of View

By Michael Stone – (Jul 16, 2009)

In case you don’t think it’s important to have change work orders signed and paid BEFORE making a change, read this note I received from a homeowner yesterday:

Construction Coach Success Story

By Michael Stone – (Apr 14, 2009)

A young couple came to us for coaching in February, just two months ago. While their P & L was not all that bad they could and wanted to do better.

No More Mr. Nice Guy

By Michael Stone – (Mar 25, 2009)

I took a call from a married contractor with four young children. He can’t collect the final funds due from an owner for a large job. They are about to lose everything.

Cost Plus: Bad for Government, Homeowners, Contractors

By Michael Stone – (Sep 30, 2008)

During a presidential debate, one of the …

Cost Plus: Bad for Government, Homeowners, Contractors Read More »

Is It Gouging or a Fair Price?

By Michael Stone – (Aug 7, 2008)

An earlier post of ours is getting a few homeowners riled up. The post discusses homeowners who have contacted us, unhappy about the prices their contractor is charging.

Downpayment on a construction job

By Michael Stone – (Mar 29, 2008)

Got a phone call recently from a contractor doing a job in the $150K range. Everything is fine, contract signed, and the job is going great.

Time and Material (T & M) Contracts

By Michael Stone – (Feb 20, 2008)

I have read several posts on forums late …

Time and Material (T & M) Contracts Read More »

The Danger of Short Contracts

By Michael Stone – (Jan 5, 2008)

I often hear from contractors having problems with their customers. Many of these problems are because of the written contract they use for their jobs.

Why You Need a Well-Written Contract

By Michael Stone – (Jan 3, 2008)

A client decided to change the rules of their contract. She decided not to pay the full amount or on time as the contract specified.

Write a Clear Contract, Protect Your Assets

By Michael Stone – (Jul 23, 2007)

I am serving as an expert witness this week for a new home builder in our area. There are many issues in this particular case, but there is one overriding problem.

Contracts for Construction Jobs – Even Small Jobs?

By Michael Stone – (Feb 22, 2007)

A question arose this morning on a call from a contractor. Should you write a contract on all the jobs you do, regardless of the size of the job?

Provide a Service, Make a Profit

By Michael Stone – (Oct 19, 2006)

A young businessman called. He was in a state of shock after checking his books over the weekend and found over $11,000 in receivables, much of it over 30 days.

Cost Plus, Cost+, Time and Materials, T & M

By Michael Stone – (Aug 21, 2006)

A coaching client was working with a potential customer who wanted a remodeling job on a cost plus basis instead of a fixed fee contract.

Scroll to Top