Hey guys,
How do you handle a commercial project that you have discussed with the owner and their budget is not near enough to do all the work safely and properly? They have about half the money they need to do it but are going forward no matter what even if it means some “subpar” work. Do you tell them and just back out of it? Do you offer to do work up to what uses up their budget? Any other scenarios?
Large scale project (sprinklers, ADA requirements, fire insepctions, elevators, etc)
I’m leaning towards just backing out but curious as if there are any other options.
Thanks
Replies
I am guessing that you know they have run out of money when you don't get paid. Does not sound like a great opportunity to me.
Bruce
Good point....
where is the upside?
I don't see one
Well, the only upside is its a $400k project. But they really need about $650k
So they are talking about just starting it and "saving money where they can". I just don't know how you save money on a fire sprinkler system that isn't there and yet needs to be.
I guess I just want the job as I know "someone" is going to get it...but they might get more than they bargained for. And once your name is tied to the permit or contract, you really just can't walk away.
Its just one of those things where you hate to walk away from a job...even though you know its not a good job. Personal indecision I suppose?
what is your good name worth?No Tag
You will be the contractor remembered for walking off the job before it's finished.
I dont have a Corvette cause I dont have the money for one.
See my point?
It would be a disservice to all involved to even start the project.
Your client either needs to scale back, or find more money.
Family.....They're always there when they need you.
Well, I guess thats a good analogy expect I don't have a Corvette because my wife won't let me! :)
But yes, I agree. Like I said I just hate the idea that someone else will get this job and I won't even though I know its going to go "south" about 3/4 of the way through when the funds run out.
So you're saying, you'd rather be the one who ends up not getting paid when the money runs out?
If you really want this job, make this guy really want you to do it. Then follow my original suggestions, either scale back, or find more money.
Family.....They're always there when they need you.
Edited 9/30/2008 5:47 pm ET by MSA1
MSA,
Yeah it sure could play out that way couldn't it?
Yikes!
The way you fix your thinking is to say, "I am just glad somebody else will lose money on this job and not me."
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
From the legal perspective, be sure you get a great waiver, in writing, up front. If the owner want's subpar work, and you do subpar work, there's more than a good chance you'll be seeing the inside of a courtroom in your future unless you have good documentation -- and maybe even if you do have good documentation.
Mike Hennessy
Pittsburgh, PA
Mike,
Yeah, we discussed that today about my concerns for subpar work and how someone could get hurt in the future or the place burn down and the owner said I was "just paranoid".
I think my paranoia is justified as I not only do not want to see the inside of a courtroom but also not the inside of a jail cell if someone would get killed in the building later.
The more replies I read, the more I hear the words "Walk away...walk away"
Thanks
Absolutely right there.The other down point is that it will wreck his relationship with his subs for other work
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
The answer is simple: back out right now. Sounds like a ploy to gain your sympathy ("please, Mr. Contractor, "X" dollars is all I can afford), then, if they haven't already, they may follow that up with excessive flattery in order to soften you up so that you'll given in to the often outrageous demands made later, in which case, they'll more likely than not be completing their project on their budget or something along those lines. I don't know the particulars of your situation (work is scarce, you're really wanting to get into commercial construction, etc.), but regardless of the particulars, doing business for people like this is not worth it. Trust me. One more thing, you mentioned that there isn't enough money in their budget to do the job safely. I don't know about you, but that's a HUGE red flag, in my humble opinion. Do you know what would happen to you if somebody were to get hurt while working on that job? Contact the OSHA folks in your area, they'll let you know. Sufficeth to say, it ain't pretty.
Good Luck.
Edited 9/30/2008 6:28 pm ET by joshd
OakRiver Mike.
I'd start the project and work untill the money paid thus far stops coming.. If the last thing you do is connect it either the money keeps on coming or the work doesn't get done..
Another words work from the outside to the connection not the connection to the outside.
So they are talking about just starting it and "saving money where they can". I just don't know how you save money on a fire sprinkler system that isn't there and yet needs to be.
I can help ya on that one... I posted it here... sprinkler systems are apples to apples... yeah in some places you can use plastic pipe... you can cut back on "designer finish" on the heads ect... but for the most part each area will require a certain coverage... period... you can't over cover an area becaus then it would stop other needed heads from going off... no one company or installer can really give you a BETTER system... wet vs dry wet is cheaper... but for the most part... apples to apples...
just on my loft project i got 3 bids... 70k 110k and 135k kinda floored me so i went to the sprinkler guys forums and started asking questions... so i got 3 more bids... 210k 170k and 39k... the 39k had an inhouse engineer and had been in business for 60 years... local co....
so don't assume you can't do a 600k job for 400k and do it well.... in these times I wouldn't be a bit ashamed (not that i ever would be) to price shop every aspect of the job...
start with the plans... keep everything simple... eliminate small rooms... elevators? another huge mark up item.... get a ton of bids... go to one larger vs 2 smaller if you can... basic car... you can spend 30k dress'n up a car... elevators are pretty simple but thwey like you to think they are some type magic... ADA there are some simple forward designs that don't add a huge amount to the budget...
If you think you can... take it on as a challenge... treat it like you were spending money out of your own pocket... and maybe it can be done... no extras... no nice finishes... bare bones... if there is anything left you can dress it up
p
I was just going to say the same thing. Shop, shop, shop the bids. Find the guys that aren't too busy. Find the guys that will give you their best bid, not the best bid for their xmas bonus! I'd at least bid the job out and see where the chips fall. In the bid process, I'd explain to every contractor that they need to get the project in at 400k and that every trick in their value engineering book should be used, as long as it delivers a safe and legal product. That type of bid process might seem unseemly to some but hey..not everyone can afford gold leaf trim.
I don't understand that it's a bad thing to have a tight budget... it doesn't have to mean sub par work... it just can't be approached as "cost plus" means set in stone low ball bids... and yes in some places it might mean cheap...
but who says it's a 600k job? which it might be if you figure X$$ per sq foot... stain & seal concrete floors vs anything else and you have saved a min of $2 a sf even over vct installed...
some aren't comfortable asking for peoples lowest price... think it makes them look cheap... and i understand if you have never had to work that way it's nice to have a large budget where all you have to do is call who you always call... and not even get a price just pay the bill when it gets there...
all depends on your comfort level and how well you deal with vendors... If you aren't comfortable working to a super tight budget then I'd pass on it... it won't be as easy as pick'n up the phone and say'n send us 12 of these and 24 of that and about 40 of the other... it's more like i need 40 matching door locks... you have anything nice thats been sitting on the shelf for a while that you could give me a good deal on?
just takes the right mindset...
p
I know when the sheet hits the fan, the owner is going to forget about who's money "we" were saving, and blame you for whatever isn't right.
Joe H
Those were my thoughts exactly. All that "we" talk goes to "you" talk when the work fails or the money runs out before it is complete. And they won't sue each other! DanT
If your going to go broke, don't do it working!!
RUN FOREST RUN
RUN AWAY!!!!!!!!
Seriously. IF you feel the need to shop prices to see if you can get there go ahead. All I do is commercial work & I have seen this scenario way to many times. Don't let a lack of work or the size of this blind you to reality. YOU WILL LOSE. If you really want to take a run at this experience I can condense it for you. Just send me a good check for $10,000.00 and your phone number. I will only call you screaming at you for a week that you aren't doing anything even though I'm not paying you any more money. In one week for way less than my lessons cost me you will be educated in this matter. Any other breaktimers who would like to take this condensed course on strapping ones self over the barrel without the aid of a lubricant can also get this special pricing.
"this dog may be old but he ain't cold. And he still knows how to bury a bone."
Lattimore
http://www.rehmodeling.com
I can see that you've learned the fine art of subtle answers, the hard way.
One question I had in reading all the posts is "who said it would cost $650K?" And if the Owner is still going to go ahead with this project, even knowing it cannot be completed, based on the financing, who's going to be responsible to an incomplete project? Probably the contractor, never the Owner.
I dealt with bottom feeders (my term) when I started my Architectural practice and now I refuse to deal with an Owner who starts with his financial woes....but still wants to do the project. Ultimately I became responsible.
Short story, similar scenario. Good local contractor calls, asks what do I know about this unfinished house around the corner from me, seems he's almost under contract to finish the project (Owner ran out of money but has some now...hmmm). RUN FOREST RUN! The house? Huge, ugly and buried in liens from the previous General and all the Subs. Seems the Owners idea of cutting cost was to not pay.....anyone! And to top it all off he didn't even own the land! Went into hiding for a while (Florida vacation), shows up looking for someone who ultimately called me. RUN FOREST RUN! Kid was very disappointed but he did check out my sources of information and didn't take the job. (The Owner called me and threatened to take me to court for slander. Told him to go right ahead. I'm sure the lien holders he has would love to know he's back in town. That right there was fun!!!)
I've had way too many people who want something for nothing or as little as possible....who really want someone else to pay for it. I, regretfully, would say NO DEAL.
My opinion and I've been wrong before and will continue to be wrong.ciao, ted "You can have it fast, good or cheap. You can only have two of the three. Fast and good, it won't be cheap. Good and cheap, it won't be fast. Fast and cheap, it won't be good. Now, what's your choice?"
Mike, if you are sure that the job can't be done for 400k, then I agree run. If you are just standing in a field and "think" the job needs 650k then you owe it to yourself to get a little more information.
Take the plans, ignore what you have been told the job should cost unless the figure came from at least 3 experienced general contractors.
Talk to your subs as Pony and Jim suggested, see what value engineering is available through them. Make a list of possible substitutions on specs.
keep everything legal and to code.
Add up the numbers you get back and see for yourself what it will cost.
Then decide if it fits the owners budget.
This project (going in) sounds horrific. In your post you state sub-par work, what would you tell your help and your subs. I'm amazed that one's gut doesn't say run, don't walk away.
Time to stop and ask yourself,
How many projects have you seen come in UNDER Budget?
They have $400k and the initial cost estimates are $650K? They probably end up needing $660 or $670K.
RUN while you haven't lost money yet.
Guys,
Thanks for all the inputs.
I have decided I am going to propose to the owner we get hard and sound estimates on ALL aspects of the project (its a huge renovation by the way not new construction so a bit harder to bid) so he can see what these items will cost as some are high dollar amounts no one can just guess at. There will be a charge for all this and if he doesn't want to at least go that far, than I can see I don't want to be part of the project.
Mike
FWIW
That is how I would approach it.
They can't get your Goat if you don't tell them where it is hidden.
That's how I would approach it. Get paid to bid it or at least wait till all the plans and engineering is done, then bid on those docs.
I thought you had some good figures to work with already to know it was a 600K job.Yes, do get real info before you bail.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!