All price proposals need a deadline because you never know when material and labor costs will increase rapidly.
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.
Almost all conflicts contractors face could be avoided or quickly resolved if there is a clear, detailed construction contract between the parties.
Why cost plus and time & material contracts should be avoided, for both contractors and building owners.
Time and Material contracts are full of risk, especially on larger jobs.
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.
I’m not a fan of working with government agencies, but some situations are unique.
When clients try to change the terms of the contract, you don’t have to go along.
Over the years, I’ve seen contract language evolve, shifting more and more responsibility to general and specialty contractors.
Is it a good idea to have a service agreement to cover small jobs under a certain amount?
Avoid losing money by recognizing some of the games that building owners play to avoid paying.
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.
A contractor who has designed projects asked how to protect his design work.
There are things you can and should do when a client tries to dodge making payments.
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.
“Let’s see what the contract says about that.”
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.
Not all of your clients are honest. There are even a few who have no intention of paying you for the work you do.
A contractor asked for my opinion on a request he recently received. It’s not a win-win proposition.
If you’re doing service work, make sure your client knows what to expect before you start.
A call came in from a friend recently. It seems that a client of his wants to cancel a signed design agreement.
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.
Your contract should call for arbitration, not mediation, to settle disputes.
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.
There isn’t one right way to handle allowance items that works for all contractors and all clients. Plan A may work for most clients, but then you meet Mrs. Oddball who seems to work at being difficult. So you derive Plan B and hope it works.
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.
At least once a week I hear from someone who can’t get paid for work they’ve done.
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.
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.
How do you deal with a dishonest client? I recently corresponded with a contractor concerning this issue.
Retainage clauses, removing the finance charge clause on the last payment, “we’ll pay you when we get paid”.
What do you do when a client calls about a problem they created? Preventative measures make the difference between a profitable job and losses.
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.
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.
We used to get three payments on jobs. 1/3, 1/3, 1/3. That’s not a smart business practice.
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.
Estimate your jobs properly so surprises don’t happen.
Seven issues that upset clients. And when clients are upset, either you won’t make the sale or you might not get paid.
A selection of issues that should be written into every contract to protect your profitability.
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.
Commitment language in your contracts, payment schedules that help cash flow, right of rescission language. With a few extra comments.
Many construction-related disputes can be avoided with a well written contract. Here are a few of the things that need to be included.
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.
Too many contractors use a poorly-written construction contract, or no contract at all, leading to different interpretations of an issue.
If you're a remodeling or new home contractor, how can you get clients to make their selections before you write the contract? Make it easy for your client.
Intent to lien – payment schedules – contract language. Common problems contractors experience on jobs.
Don’t take any job where the client tells you how much you can charge for your work.
Guidelines to a more successful construction-related business.
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 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.
Contractors have cash flow problems for two major reasons: poor money management, and poor payment schedules.
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%.
If you want positive cash flow in your construction business, make sure you're using the right payment schedule on your contracts.
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.
A homeowner commented on a forum. He’d been told to add $3 – $5K to a job just to cover the extras that will come up. He was under the impression this is normal.
Does a job have a “life expectancy”? I believe it does and you should be aware of the warning signs.
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.
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.
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.
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.
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.
A coaching client related how one of his customers arbitrarily decided to change the payment schedule that was clearly written on the contract.
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?
At a recent class, I was covering the basics of getting paid for additional work orders. I gave an example to emphasize the necessity of getting paid for your work.
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.
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.
Just a quick reminder. Be sure to put a limit on the length of time your proposals are valid. That time should be a maximum of 3 working days, no more.
We recently got a call from a young man with a remodeling company in the east. An architect was providing him with a great opportunity and he wanted my opinion.
A question came in this week from a potential coaching client about when to schedule payments on their contracts.
What do you do when a progress payment from your customer is late?