Posts Tagged ‘negotiating’
|Don’t divorce your contractor!
Thursday, March 4th, 2010
Firing a c
ontractor in the middle of a project is like getting a divorce: it’s ugly, and it’s expensive. Dishonest contractors know something you might not: once work commences, your project is no longer desirable for any other contractor. If you’ve been talking to contractors, just ask them how they would feel about taking over a contract that was stopped in the middle of work from which the previous contractor was fired. You might be surprised to hear—EVEN IN THIS ECONOMY—what the answers are. Add to it that most likely if you fire a contractor that you will not feel like paying them as much as they feel is owed to them at that point, so they will likely slap you with a mechanic’s lien and law suit, and you’ll want whoever takes over the project to help your counter-suit by acting as an expert witness for you. You’re now asking for them to volunteer to be embroiled in a law suit. Thanks, can I get a side of kick-in-the-teeth with that? (more…)
Tags: Construction, Contractors, contracts, homebuilding, law suits, negotiating, residential, termination
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Time, Tide, and Loyal Clients
Thursday, February 25th, 2010
There is a saying, (well, it’s more than a “saying” but anyway…) that every Plebe learns at the U.S. Naval Academy, and it goes, “Time, Tide, and Formation wait for no one….” It’s something that I learned when I was a Plebe, and it has stuck with me throughout my professional life. Time and tide (or weather) wait for no one; that is self-evident. Similarly, clients, if they are to be loyal clients, will not wait for slow contractors. When forced to wait, loyal clients become angry clients. Here is some general advice on how to approach the important question of time with a contractor. (more…)
Tags: bid, builders, building, Construction, Contractors, contracts, estimate, homebuilding, negotiating, remodeling, residential, scope, time
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Avoid Change Orders
Tuesday, February 16th, 2010
Most contractors can have a reasonable idea of what a typical customer expects, so why do they spec it lower and give you an unreasonably low price? Two words: Change Order. Change orders, while a perfectly legitimate instrument of contract modification, are the dishonest contractors’ tool to bring his profitability up and turn a loss for him into a gain. I think back to a contractor some friends of mine had used to put an addition onto their home, and how they were shocked when, after the rough-in phase (so, bear studs, wiring, heating ducts, and plumbing, no insulation or drywall), the contractor said, “I’m done.” Steve (name changed) was beside himself because the work was not done to his expectations, but sure enough, there wasn’t a clearly defined set of specs stipulating where the project ended. The contractor knew that, so he played him. You can imagine what Steve’s bargaining power was with that contractor when they sat down to discuss that change order and heard the pricey new cost involved… pretty dirty trick. Why the change order tactic works for the dishonest contractor is because there is a legitimate additional cost associated with changing things mid-stream compared to doing it differently from the start. Changes require re-work, ordering new material, slowing down other phases, bringing in different workers, or having to re-do any of the previous work, which translates into legitimate higher costs to the contractor, so you can’t simply use the change order practice or relative steepness in price as a means of spotting a dishonest contractor. The fact is, change orders are expensive, so avoid them by planning and choosing well before work begins. And have the discipline not to change things once work is underway. If you have done enough planning and specified the job right, any changes you make mid-stream should not result in a significant enough gain for your project. Be confident! Guard against buyer’s remorse and stick to your original plan.
Tags: bid, Contractors, estimate, negotiating, price, scope, specs, undercut
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Scope of Work
Tuesday, September 22nd, 2009
Without a clear scope of work, you really don’t know what a bid for construction work includes, and the more complex the job, the greater the chance of this unknown factor coming back to bite you. But I would say, if you haven’t discussed the specs, or didn’t understand them, or didn’t probe for more detail, you as the buyer have set yourself up for the fall. It’s amazing that consumers have gotten quite savvy about shopping and negotiating for the purchase of a car than a large renovation project. The former typically involves a much smaller sum of money and yet customers have no bones about negotiating here. Gone are the days people walk onto car lots and look at stickers—if you don’t have the buyer guide report in-hand when you meet a car salesman, you’re living in the 80’s (and I’m not talking about leg warmers and Duran Duran). Why is it, then, that when it comes to remodeling a kitchen, building an addition, or even building a new home, contracts that are $30K – $1M+, all you ever hear is “I found someone to do it for $5K cheaper than the others.” What does that mean? It’s like saying “I got a red car cheaper than a blue car and saved $1,000.” Huh?
Understanding the scope of work is important when looking at different bids because if you blindly trust the contractor will deliver the level of finish and workmanship you expect, their perspective will likely not match yours. Just like you hope to get the level of finish and craftsmanship you want for the least amount possible, your contractor wants to get the project done for the least amount of cost possible to him or her. If you don’t make sure that they understand how you expect it to be done and look once it’s done, then you are leaving yourself wide-open for a big, ugly surprise. It is a rare thing these days that a contractor delivers a project that exceeds expectations. Even honest contractors have a level of finish they need to solve to, and while you might expect them to deliver a sexy Italian sports car, they might build you a Japanese sedan. While both are desirable in their own way, one is much cheaper to do than the other. In fact, I would say that if your expectations were exceeded without reviewing scope of work, it would be plain dumb luck and good for you! Usually, if you haven’t gone over the gritty details and set mutual expectations, it will be unlikely that the contractor will intentionally “wow” you.
Tags: Contractors, negotiating, scope, specs
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