OK… here’s the scenario. Quoted a decent but not huge job out. A bathroom facelift, nothing special. Had a vibe the client, although a friend of a friend, might be a bit of a PITA so I went a little high to cover potential nitpicking. She went for it and asked how soon we could start. I forwarded my basic contract which calls for payments in 3rds at start, midway and “substantial completion”.
In return got an email talking about her extensive experience GCing jobs etc etc (you know the spiel) and saying that her policy is to provide all material and pay for work based on what’s been done, which to me has a strong scent of headaches. I said that I didn’t see the practicality in her providing material, and that I made no secret of the fact that we made a profit on material to cover chasing around, etc. I explained that as for paying based on work done that was the point of paying in 3rds.
Her reply was that she would arrange for all material to be on site, and assumed responsibility for that. She is also proposing to pay at demolition, “general installation” and final completion, and she is asking me to revise the contract to reflect this. On the surface this doesn’t seem unreasonable but I have to say I get a strangeeeeeeeee feeling that this is going to be a headache. On the other hand, it’s a good enough job that I hate to just blow it off.
What say ye?
Replies
Your Eminence... I'd be very grateful for your learned opinion on this ;)
PaulB
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Walk away. Cash flow is important and she's depriving you of it. You've figured out a way to make your business model work and she wants to modify it. Sounds like a control freak. It won't end well for either of you,but you'll get stiffed.
One alternative: If she's done this before, ask her for references so you can see how it worked out.
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Yeah...this is a tough call for me Grant. Business is really reallyyyyyyyyyyyyy horrible so I hate to turn away a good, high profit job. If I were a customer I'd probably consider her proposal perfectly reasonable but I have to say it smells funny to me.PaulB
http://www.makeabettertomorrow.com
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This is the text of an e-mail I recently sent to a client that I declined to go forward with.
"I appreciated our exchange of views yesterday. After mulling things over though, I believe that we are not a good fit. Accordingly, I have decided to withdraw from the project. I apologize for the inconvenience, but I feel it the best thing to do."
You've got to trust your gut, and believe in the fact that YOU know what's best for your business, not someone else.
Paul, assuming that the 2nd payment comes at a reasonable time and has hard-and-fast milestones not open to interpretation, it seems almost okay. On the surface, anyway.
But "completion" bugs me. We used to define "substantial completion" as the point where the house is usable, and a Use and Occupancy permit could be issued. That's where we got the bulk of our last payment.
Then the last (small) draw of 10% or so, collected after owner approval of all punchlist work.
The facts that business is horrible otherwise and it's a good profit (smaller) job would probably lead me to ignore my gut and do the job.
I would want appropriate protection for the materials issue, including something for your time if you have to wait for her stuff. The suggestion of checking out references is a good one, especially talking to the other contractors that worked for her. Consider too, negotiating a fourth payment into it so she doesn't get too far ahead of you.
Don K.
EJG Homes Renovations - New Construction - Rentals
You made your proposal and submitted a contract to be signed. She rejected it. But, if you write up a new contract with her stipulations, she MIGHT sign it.
With all of her GC experience, why isn't SHE writing the contract. After all, it's her proposal. I suspect if you asked her to do that, it would spell the end of any possibility of working for her because she's the boss and not about to be pushed around.
It sounds like she would like to treat you as an employee. And she wants to do that even before you started the job or even have a signed contract. Maybe you should just work for her on a T&M basis. Would you like to be her "employee" and work T&M? I have at least one regular customer who treats me that way and it actually works out extremely well. Of course, it helps that I thoroughly trust him... so much so, that I work without a signed contract.
And when she says all materials will be on site, does that mean nails, glue, caulk, etc. or are we just talking about the medicine cabinet, etc. If she just means fixtures, then I would have no problem. In fact, I would welcome it. But if she means stuff like backer board, it would probably scare me off this "opportunity".
paul....... my proposal is a fixed price for everything, my payment schedule, my reputatio.. my relationship with the subs and material suppliers and BI... my insurance, my licences
if she wants something else... it would be T& M
T means any time i devote to the job, even picking up materials she overlooked or were sent in error
also have her draft the T&M contract but make sure it includes a mandatory arbitration clause
she smells like t-r-o-u-b-l-eMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
"It sounds like she would like to treat you as an employee. "Exactly, so force her to take on the responsibilities of contractor!
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Paul,
That would give me a strange feeling too.
It's easy to say the job doesn't fit your business model and walk- but if work is slow and you need the job, you might consider a compromise.
I would re-negotiate the contract for labor only and use a higher rate to cover the loss of profit on the material mark-up.
I would also specifically exclude myself from any warranty responsibility on owner-supplied materials, and state that you will bill for all time needed if parts are missing, materials are incorrect etc.
Finally, I would suggest a modest deposit to hold the schedule and then bill at the end of the week for my time. Set it up to bill on Friday, check is there on Monday before you continue, or whatever you can agree on.
One other thought, how long is the job going to take? Facelift on a bath probably isn't going to take much more than a week anyway-is it? Seems unnecessary to bill a client every few days.
My $.02
Paul, how long is the project going to take: one week? Two Weeks? Three weeks?
Is it possible that you could break the payments into five or six anniverseries?
The goal is to make the last payment as low as possible. I'd counter her proposal with this:
Five payments:
5% Now as a Deposit on the time slot
25% at Demo
25% at Commencement of Drywall
25% at Commencement of Plumbing top out
5% at Substantial Completion.
Or, break those anniverseries at something that makes more sense for the project. The goal is to get to the 95% mark before the nitpicking arguments begin. The most you stand to lose is 5%.
As a counter, she might try to move that last payment to something more than 10%. Don't let her move that last payment beyond that. You don't want 33% of your labor bill at risk here. Justify your position by telling her that she can fire you anytime if your work isn't satisfactory, (which she can in any contract).
Paul,
I'd be concerned about her supplying all of the materials. A big part of a quality job is using the appropriate material. You may end up wasting a lot of time with the wrong stuff. You may also have more risk of material related problems after completion. At that point it may be hard to argue that the choice of material was at fault and not the installation.
Maybe you could offer a reduced markup on the building materials and let her supply the fixtures. You can then, hopefully, make it up in your labour rate. That would give you back more control and reduce the risk.
I'm figuring this at about 3 weeks... take down existing wall tile, replace with wainscot, veneer ceiling and remaining walls with 1/4" gwb, fabricate and install solid surface tub surround, all new trim, build out close shelving, replace light fixture and exhaust fan, install GFI, a few odds and ends and paint.
I'm inclined to offer a compromise that (as someone else suggested also) leaves me with less exposure then she is proposing. The thing that has me a bit spooked is especially that "her policy" wasn't announced when we first met to discuss the project. I worry what other "policies" she has up her sleeve...
I'll let ya know how it goes.PaulB
http://www.makeabettertomorrow.com
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Paul,I'd go to the beach if I were you ;-)
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I'd go with your gut Paul. It's funny, when we can least afford NOT to trust our gut is when we don't...it's easy to trust your gut and walk away when you have plenty of work, but when you really need the work is when your most apt to set yourself up for getting screwed...because you're desperate and ignore warnings you otherwise wouldn't.
Trust your gut and keep your backside covered.
It is easier to lose money sitting at home.
I would suspect she would not go for a sensible T & M rate to make it worth your while.
She supplies the materials so she can figure your wages and profit on the job.
I would take a pass.
Best of luck
Hi Paul,
Glad to see your moniker back on BT. Lots of good advice here so I'll just add one thing I've used successfully, to keep the nit picking interruptions at bay. Basically it's about taking territory.
I tell people, even write it into the contract if I feel it's needed, that the work area in the house is my job site while I'm there. That I don't want anyone, including them, walking through during working hours.
In addition I don't want any interruptions for questions or offers of food and drink during working hours. I explain that I'll be available for questions before and after working hours, so they should write down anything that comes to mind and we'll discuss it fully at that time.
I started using this policy because I found that I don't do well at switching roles during working hours, from totally focused on the job to genial, gracious contractor.
Those two roles are quite different. The first requires full concentration and awareness of everything that's going on, from shortly after breakfast until I relax and shut it all out before dinner.
The second is sensitive to the feelings of the HO, often a woman, so it's a complete one-eighty for me. I can't do both at the same time, not very well anyway, so I eliminate the need to do the second one with the aim of benefiting all involved.
Edit: I should mention that, due to this policy, I have a reputation for being less than a perfect diplomat but it has worked so well for me that I'll gladly accept that rep.
In the long run, I don't believe it has cost me anything but a few jobs with people who insist on being involved in the process or need constant attention. The rest of my clients respect the reasons behind that policy and comply quite happily, even if they make an occasional joke about my lack of social awareness while working.
Edited 7/16/2009 12:02 pm by Hudson Valley Carpenter
While I can't tell you whether you ought to take the job or not, I am reminded of somethings my old boss used to tell me:
"Do business on your terms, not theirs."
and
"Don't let the biggest arsewhole in town dictate the terms of your business."
FWIW: This sounds like the beginning of a nightmare client.
Good luck.
One more thing to add:
If you're tied up in this train wreck trying to turn a profit under unfamiliar terms, It's hard to concentrate on finding the next gig.
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Run Away!
If she wants to be a contractor and you want to do the work, let her buy materials and pay you hourly.
otherwise skip it
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I once gave a guy a price to install his entry door. I think the price was $450. he called back and said home depot gave him a price of $400 and if I could do it for that I could have the job
I said no thanks, I'm not going to start letting home depot quote my jobs for me.
you gotta work on your own terms. if you agree to hers the next request from her is going to be for a material list. then you're really going to get that bent over feeling
if you really need the work raise your rate by 10 bucks an hour and forgo the material mark-up
Paul,
Go back and read seeyou's first reply. Now read Mike Smith's reply. Pick one. Either one will work. DanT
I would have a tendency to take the job.
I would just quote her an hourly rate and be certain she understands that if material is not on site, the clock is still running at least until the end of the day while she is out getting material.
Delays caused by material of more than one business day will be billed at 1/2 hourly wages.
With this sort of arrangement, I don't think asking to be paid weekly is unreasonable. No payee - no workee on Monday.
Someone else suggetsed that since she has GC'd other projects, ask for some references from her other projects -- sounds like a good idea.
It could work out very well.
Jim
I sent her a nice email (she was a referral from a friend after all) suggesting that after I take out the material:
1 K up front
2 K on completion of demo
2.5 K on "substantial completion"
1 K on completion of punchlist.
She supplies all material, or reimburses me at cost plus 15%.
Let ya know how it turns out.PaulB
http://www.makeabettertomorrow.com
http://www.finecontracting.com
Sounds good.
Paul, I had a simular type of experience, spent hours with the client, gave a price, was told the job was mine, $70gs, and then the client wanted me to start getting my subs and some others who he was contracting smaller jobs to lower their prices. wanted 'best quality for the cheapest price'. although I was hurting for work I turned the job down. Stop by the job after it was in progress because I knew the contractor, turned out to be the biggest nightmare he ever undertook. sometimes you have to RUN PAUL RUN.
let us know what you decided
orbs
Did you back out the markup on materials and add it into your labor rates before giving the new pay schedule? That is the first thing I would do, make sure I'm getting my markup no matter who's buying the materials. Sooner or later it's going to be my problem anyways, so I'm going to gte paid for it.
I also thought, it's a 3 week job, not 3 months. 3 weeks is too little time to worry about shifting monies around and risk losing a high profit job. I definitely recommend following up on it. Just as you did, a higher amount up front, then be prepared to walk at any minutes she delays your cash flow. I would have written a provision that I will start immediately AFTER I review the stock of materials she ALREADY had delivered and stocked on the job. To her I'd say, you are right, it is a small job and no need to quibble about the pay schedule or who provides the material. Luckily with such a small job, it'll be easy for you to order all the material and have it all on site before I start. I'll review the stock pile and make sure we're ready to hit the ground running. Just let me know when it's all here, I'll double check it's what WE need, and I'll plan an early morning start the very next day. In the end, she wins, and you can't lose. Vic
$6.5K for 3 weeks work when times are tough - not a bad gig.However: You success will depend on your being organized, professional and clear in your communications.Organized: You need to be methodical and organized to demonstrate that you are running a business which has been developed and refined into a set of means and methods. You are not making it up as you go along, pursuing a hobby or playing weekend warrior. The extent of your organization will determine/ inform the client to what extent you are willing to waive from your established/ tested path to completion.Professional: This is a business relationship, not a friend relationship. Don't confuse the two or you risk her confusing them. Keep in mind what affect compromising has on the bottom line. All contracts have compromises. It's part of the negotiation process, but there's an implied give and take - an exchange. After the terms are established, stick to them. Be courteous. Clients are allowed to ask. It costs them nothing. You are allowed to say no. You are also allowed to charge for additional services.Communication Clarity: Many relationships, regardless of type (don't ask me why I know this), fail due to miscommunication. Be clear. Be calm. Does providing materials on site mean Hardibacker sheets stacked on the lower level porch, in the hall leading to the bathroom or strapped to the roof of her car. This depends on how YOU calculated your labor costs. It may have nothing nothing to do with HER costs in providing materials. Be smart and clear (to yourself) how you calculated labor costs. Doing stuff within Contracts where responsibilities are divided can get very messy. Whatever you do sets a precedent of what you are willing/ being paid to do. During contracts of short duration, this is often disregarded in favor of expediency. Making a short , clear and strong comment allows you to accommodate the client's wishes while letting her know it is a one time exception.Last point - In an earlier post you stated you "made a profit on material to cover chasing around." I think you intended to state that you applied a MARK-UP to cover chasing around - an important clarification.Hope this helps.Frankie
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Excellent post Frankie.
Advise her/him that you wish them luck in finding another contractor, if they should choose you instead, then your conditions are the ones under which you'll do the job.
Paul ,
I can tell you what the attorney said ,
" whenever you do something different then normal , it will prolly cost you something"
My fear also is you show up and all the correct materials are not there to do work , do you get paid if no progress is made ?
trust your gut and cover your butt
regards dusty
Thanks for all the input folks...
As I mentioned earlier, I made a counter proposal in between what she wanted and what I did. Never got a reply so I gather she's the "it's my way or the highway" type. Probably saved me a lot of grief ;)PaulB
http://www.makeabettertomorrow.com
http://www.finecontracting.com
No way I'd take that job. Even at time and materials. That woman sounds like a pain in the ####. Paper contractors are the worst. Especially females.
I remember talking to some gal who knew the folks across the street from a house I built. She wanted a price on a bunch of work and then proceeded to mention that she'd want to see my paperwork, you know, subcontractor bids and such. I couldn't help laughing. All of a sudden I got way too busy, heh, heh.