What are you doing to assure yourselves of payment when the deal is between you and the client, with no bank involvement, and no loan? I am looking at a potential for a cost-plus design-build job, an expensive weekend house, for a client who is a lawyer, and lives two states away.
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Do you really expect to get ahead of a lawyer on payments? Expect to be working in the hole for the entire job and fight like h*ll for your last payment. Nothing you can do will assure payment and legal action in the end is costly to you and nothing more then a DIY project for them.
CAUTION:Using regular subs may result in the need to find new regular subs.
If your contract is not absolutely airtight expect to be beat over the head by it.
This of course is worse case and the reason I don't work for lawyers. Accountants and doctors only if pay schedule is ahead of my out of pocket.
A friend of mine has a great method for out of town cost plus jobs.
He uses a spreadsheet program and a new bank account, dedicated to that job/client alone. He has the client direct-deposit funds into the account to cover costs as anticipated by the spreadsheet/schedual.
The great thing about the set-up is the Owner can track the costs, daily if he wishes, and knows based on both the spreadsheet and the report from the builder when money needs to be transfered into the account. If the account goes dry, the workers go away until the money returns.
I've never used the method since I've alway set up my jobs with progressive performance payment scheduals. The last payment is always less than the small claims limit.
I just started one for a lawyer on a project management basis. He owns a local bank account into which he can wire money and I can write checks. He knows that the work stops when the money isn't there.
On my part, he knows my reputation and I am aggressive in communicating via phone, digital pictures and email so he knows without doubt what is going on.
Excellence is its own reward!
"The first rule is to keep an untroubled spirit. The second is to look things in the face and know them for what they are." --Marcus Aurelius
Since work stops when money isn't there, and typically nobody pays till the work is done how do you stop work that is done with no money there? What exposure to your subs are you willing to take on behalf of the customer?
You are wrong to assume that nobody pays 'till the work is done. On a contracted job with a set payment scehdule, you should have a deposit to carry through and draws that come aaaas each phase is starting. The advantage to the customer is that the money is still sitting in his acount until I pay subs. The advantage to me is that I know I can reach out and touch it without wondering about "it's in the mail" or not.
He is to plan to wire 25 grand per month. I will send reports.
I like that other suggestion of the spreadsheet connection. I'd like to learn more about that one..
Excellence is its own reward!
"The first rule is to keep an untroubled spirit. The second is to look things in the face and know them for what they are." --Marcus Aurelius
geob... note that piffen said<<<<<<draws that come aaaas each phase is starting>>>>
you make the "payment schedule"....... you control the flow.. and define the pay points with starts, not completions
on a typical remodel we usually have about 10 payments...Mike Smith Rhode Island : Design / Build / Repair / Restore
Mike please note that piffin clarifided this in his response.
And typically 10 payments on a remodel job... Are you serious?
Edited 11/6/2002 6:50:08 PM ET by GEOB21
I will see anywhere from two to twelve payments, depending on the size and scope of the job. My biggest was about $380,000 in five months with minimum monthly draw at 50K.
Excellence is its own reward!
"The first rule is to keep an untroubled spirit. The second is to look things in the face and know them for what they are." --Marcus Aurelius
2 to 12 is not unreasonable but to have an average of 10 would mean some jobs are in excess of 20 payments. My customers would get writers cramp or die of old age waiting for job completion. I can build an entire custom house in less then 150 days and with 20 payments the customer would be writing a check every 7.5 days.
I space payments on long jobs so I get paid about every 25 days, so even if there were 10 payments this would be a 250 day job. With 254 working days in a year you can only average 1 job a year. Here's hoping you don't have a below average year.
geo.... i can't build a doghouse in 150 days... never mind a whole house addition / remodel... yup 10 is not my average , it's my typicalMike Smith Rhode Island : Design / Build / Repair / Restore
"i can't build a doghouse in 150 days"
But?
Could you get it done before the dog dies?
And if not, do I still have to pay?
lots of our dogs have had puppies, raised & weaned, by the time the "substantial completion" payment ( #10 ) comes due...
hey, rome wasn't built in a day , ya no ?Mike Smith Rhode Island : Design / Build / Repair / Restore
I guess it's time for me to take a spectators seat, guys.
Have fun.
:/).
Excellence is its own reward!
"The first rule is to keep an untroubled spirit. The second is to look things in the face and know them for what they are." --Marcus Aurelius