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How to charge

scampernatra | Posted in Business on March 26, 2004 04:42am

Hi all. Building a custom home. Plans call for one gas fireplace. Owner wants price on installing a second unit in master suite. I give price based on extra labor and materials involved ( cantilever joists, box out wall, piping, wiring,insulation, drywall, etc.) Owners supply the fireplace. Price is agreed upon and framers are told to do their thing. Fireplace to be raised off floor 18″. We get the fireplace and halfway into the install realize it won’t work as framed do to clearance issues with termination cap and soffit. I explain the issues to the owners and they are adamant about having the fireplace raised and not on floor level as it is now.I explain that there are extra charges involved. Instead of a simple bump out with a short horizontal termination and a shed roof, we now have to build a chase and a cricket behind the chase. There is extra lumber,siding, vent pipe, a custom chase cap, tearout of a roof section etc. I should mention that I had no specs on the fireplace termination points prior to picking up the unit and this was the owners choice of fireplace not the one I normally use so I was not familiar with it.       

I feel bad about the mistake so I offer to correct the problem by doing it for my cost. They say O.K. Job done I bill $450 for rebuild. Owner says they feel $225 or 1/2 is fair since I knew that they wanted the fireplace raised in the begining. Even though my price would have been higher had I  had the facts early on, they say that the cost may have influenced their decision to purchase second unit. Owner says to think about it and get back to them. A couple days later, with no more input from me, they mail me a check for $225. Now I find myself mad at the owners for their supposition that I would roll over on this. As I explained to them, I had to work 40′ up on a ladder taking risk of injury to correct this and for no income gained to myself, only the additional costs of materials and my helpers wage.  What do you guys think? Should I swallow hard and chalk one up to inexperience, or should I hold my position and resubmit for the balance? 

 

 

 

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Replies

  1. VaTom | Mar 26, 2004 05:10am | #1

    What do you guys think?

    You priced it with out specs.  You screwed up.  Live and learn.  Unfortunate they were so cheap.

    PAHS Designer/Builder- Bury it!

  2. FastEddie1 | Mar 26, 2004 05:19am | #2

    So you provided a hard bid to install a second fireplace unit, without knowing the specs of the unit?  Shame on you.  Or, did you assume it was the same unit # as the first one, but instead they bought a different model?  Did your proposal state that the second unit would be the same as the first?  Hindsight comes into play here... Could you have forseen the problem when you opened the box?  I assume you took delivery of the unit before starting work.

    What kind of language do you have in your contract, or what precedent has been set for other items, with regard to owner-supplied material? 

    Don't cash the check, and assume you can negotiate for more later.  If they agreed that you could bill for the actual charges, then maybe you need to show them a detailed cost analysis for that particular change order, including a a detail of what it should have been billed as.

    Seems unfortunate to get on the wrong side of the customer for $225.  But then it also seems like the customer is being a little horsey.  Any more potential changes on the horizon?  Maybe settle this one for the $225 and then make up the balance on the next change.

    Whenever you are asked if you can do a job, tell'em "Certainly, I can!"  Then get busy and find out how to do it.  T. Roosevelt

  3. xMikeSmith | Mar 26, 2004 05:34am | #3

    scamp... you priced it without enough info... too bad.. best thing to do is live with it  and keep smiling..

    keep your eye on the prize.. you are building a custom house.. don't screw the pooch for $225.. every change order should be priced in detail so you can be confident about your prices..... when you screw up .  ask the  homeowner what they thought  you had agreed to.. and let that be your guide...

     custom house... this will probably not be the last CO...

    sounds like maybe you are underpricing your Change Orders....

    did you have a markup amount for the price of the fireplace... even though they bought it ?... no ,huh ?...if you had , we wouldn't be having this conversation..

     they bought the unit.. for what  $1000 ?... 25%  ( O& P ).. would be $250.... that should have been in  your CO price, right ?

    this ain't a tract house.. it's a custom house.... go big , or go home

    Mike Smith   Rhode Island : Design / Build / Repair / Restore

    1. scampernatra | Mar 27, 2004 05:35am | #4

      Swallowing real hard now after getting your input guys. Yes the fireplace was a different unit than the first one ,no there was not a change order involved. I realize now that my contracts need to be tightened up and that my interpretation of a change order is to loose. The decision to add the second fireplace was made before the second story (where the unit was to be located) walls were built, so nothing was "changed" except for the additional cost to install it.

      As far as o&p go, the owners had an original budget of $1300 for the first unit. When they decided to add a second unit they paid for all of the fireplaces and accessories minus the $1300 which I paid with the proceeds in my control from their bank. My o&p is based on the cost of the entire project and not broken down by individual line items.

      One of the other factors is the owners difficulty in making timely decisions. Not wanting to hold up the framing crew, I had them build the bump out for the unit as they had the one downstairs before I ever saw the fireplace. I know that I have dropped the ball to some degree, but it burns me that they have voluntarily gone over budgets on other aspects of the house and expect me to eat this. I'll probably present them with an itemization of my costs and leave it up to them without pressuring them. The $225 isn't worth ruining our relationship and I still have other opportunities to recover my loss and more importantly, improve my business skills. 

      1. User avater
        Dinosaur | Mar 27, 2004 07:04am | #5

        Don't know what business is like in your neck of the woods, but if a HO tried that around here right now, he'd be walking around a half-finished house with a cell phone glued to his ear trying to find a new contractor.

        You goofed--but you offered to do it at your cost to make good, and he tried to screw you out of a lousy $225 on a project worth...what? A thousand times that much?

        This will not be the last time he will try to cheap you out.  The $225 is only one symptom. The fact he insisted on buying the second fireplace himself is another. You do not want to continue doing business with this creep. Lose him. The grief he will cause you in the long run isn't worth the possible profit you could make--but likely won't....

        Dinosaur

        'Y-a-tu de la justice dans ce maudit monde?

      2. Frankie | Mar 27, 2004 11:33am | #7

        Lessons learned:

        Paperwork - a paper trail - is just as important to your success as a hammer. In a WRITTEN CO you would have stated the terms (Model, method of inst as identicle to unit already installed, time added to completion date, payment amount, etc.).

        The term "change" does not only refer to changing what you have done. It ALSO refers to changing the terms, scope of work or the specifications of the contract, and of course price. "Oh, you want a dif washer? Great! that will cost $X's more - up front, before we order or even prep for it."

        Take time to arrive at a CO figure. Think of all the contingencies and ramifications. Even though the wall bump-out had not been built, it did/ would require time and effort to relay the info to the sub at the proper moment.

        The CLIENT's role is to spend THEIR money however they want and to keep costs down - any way they can. YOUR role is to get paid for your efforts and do work comenserate with your fee.

        The more information you give them to "justify" your price, the more ability they have to argue/ discuss your costs and determine what should be their burden and what should be yours. Give enough info to define the scope of work and safeguard you from doing work which "should" have been included - period.

        Don't ever let the Client determine what and/ or how much they should pay. It's a poor precident and only tells them that your figures are arbitrary and you are not a professional and therefore don't expect to be treated like one.

        It may be their home, but it's your job and how you provide for your family. You and your family come first.

        There is something new to learn everyday. I hope this helps.

        F.

        Edited 3/27/2004 4:40 am ET by Frankie

        1. UncleDunc | Mar 27, 2004 07:48pm | #9

          >> It ALSO refers to changing ... the specifications of the contract ...

          Including the schedule. Don't forget the schedule.

  4. Piffin | Mar 27, 2004 07:41am | #6

    consider it a good lesson learned inexpensively and take it with a smile, Scamp. use it as an opportunity to learn

     

     

    Welcome to the
    Taunton University of
    Knowledge FHB Campus at Breaktime.
     where ...
    Excellence is its own reward!

  5. davidmeiland | Mar 27, 2004 06:26pm | #8

    In some ways the most important part of any proposal or change order is the list of exclusions, things not included, things not covered, things that cost extra, and things you get to charge more for. I always spend as much time as I can imagining nightmares arising from the work I'm about to bid on, and include as many caveats as I can. $225 is getting off cheap... so live and learn

  6. gdavis62 | Mar 27, 2004 10:16pm | #10

    Are you on this thing all the way through, to final punchout and keys, product warranties, operating manuals?  If so, you need to work out your method, right now, for handling all future change orders with these guys.  It is a long ways between fireplace framing and carpet and light fixture finish.  You had better have a sit down with this guy, and be prepared.

    1. scampernatra | Mar 28, 2004 04:12am | #11

      I'm in this to the end. Keys and warranty. The people appear genuinely happy so far, they even ordered some of our logoed shirts. But they are a pita, at least she is ( nothing personal ladies). They are also giving us referals so I don't want to come to a head with them over this. Like I said I'll give them an itemization and let them decide what's right. I'll sleep at night either way.

      The financials and business aspects of this business always seem to be the toughest. But, like someone said ,this is my income and my family that are my bottom line and I'll have to learn to be better prepared and also more of a hard nose. Thanks for the advice.

  7. User avater
    Flathead | Apr 06, 2004 05:30pm | #12

    "One of the other factors is the owners difficulty in making timely decisions."

    Something else to consider. Make sure your contracts read that you are not required to accept change orders.

    When they want to add a fireplace and the framing crew is already working on the first floor they have about 36 hours to make a decision or one of two things is going to happen.

    1. they pay extra to stop the framing (way expensive).

    2. they pay extra to retro-fit the new fireplace.

    People seem to make decisions alot faster when you explain the cost ramifications.

    Owners have responsibilities to the project as well.

    WAHD

    1. scampernatra | Apr 08, 2004 05:31am | #13

      Never thought of that! I guess we really don't have to do everything do we?

      1. User avater
        Flathead | Apr 09, 2004 01:32am | #14

        Keep us posted and attach pictures if you can.

        WAHD

        1. scampernatra | Apr 11, 2004 05:55am | #15

          I'm going to eat the $225 and learn my lessons. It's not worth the bucks to lose their referals. I'll be much more diligent about contracts from now on.

          1. brownbagg | Apr 11, 2004 05:43pm | #16

            I would not say anything, be happy smile, get along real good with them, and hope that another cahnge order comes along . Then stick it to him. But be happy. Its not personal, its business. Crying is not allowed in construction.

          2. scampernatra | Apr 12, 2004 04:14am | #17

            Love it . Didn't know Tom Hanks hung out here.

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