Cost-Plus Contracts
By Michael StoneWhy cost plus and time & material contracts should be avoided, for both contractors and building owners.
There is No Industry Standard
By Michael StoneDon’t take any job where the client tells you how much you can charge for your work.
Contract Commitment Language
By Michael StoneCommitment language in your contracts, payment schedules that help cash flow, right of rescission language. With a few extra comments.
Progress Payments: Keeping a Positive Cash Flow
By Michael StoneWe used to get three payments on jobs. 1/3, 1/3, 1/3. That’s not a smart business practice.
Business Protection for Contractors
By Michael StoneThe popular belief is that contractors are the villains and homeowners are the victims. But if you’ve worked with the public for very long you know there are also dishonest clients.
Dishonest Clients; Collecting the Final Payment
By Michael StoneHow do you deal with a dishonest client? I recently corresponded with a contractor concerning this issue.
Construction Allowances: What They Are, How to Use Them
By Michael StoneA construction allowance is a dollar amount included in the contract for a particular item. There are two types of construction allowances: material and installed.
Mediation or Arbitration?
By Michael StoneYour contract should call for arbitration, not mediation, to settle disputes.
Collecting Payment from a Dishonest Homeowner – Updated
By Michael StoneNot all of your clients are honest. There are even a few who have no intention of paying you for the work you do.
Pricing Handyman and Service Work
By Michael StoneThere are two schools of thought on pricing handyman projects and service work: T&M or flat rate pricing. They both have advantages and disadvantages.
Time and Material Woes
By Michael StoneTime and Material contracts are full of risk, especially on larger jobs.
Why Do You Need a Written Construction Contract?
By Michael StoneAlmost all conflicts contractors face could be avoided or quickly resolved if there is a clear, detailed construction contract between the parties.
Guidelines for Success
By Michael StoneGuidelines to a more successful construction-related business.
Rapidly Increasing Material Costs
By Michael StoneQuoting a firm fixed price is riskier when material costs are increasing rapidly, which is why your contract needs to address unexpected material cost increases.
Doing Things Wrong
By Michael StoneIt’s painful to see people who don’t know better get taken advantage of by those who do or should know better.
Residential Construction Quality Standards
By Michael StoneIn residential construction, it’s not unusual for your client to have an unrealistic quality standard. That’s why you need to establish the standard ahead of time.
Do Construction Jobs Have a Life Expectancy?
By Michael StoneDoes a job have a “life expectancy”? I believe it does and you should be aware of the warning signs.
Cost-Plus, Cost+, Time and Materials, T & M
By Michael StoneA coaching client was working with a potential customer who wanted a remodeling job on a cost-plus basis instead of a fixed fee contract.
Provide a Service, Make a Profit
By Michael StoneA young businessman called. He was in a state of shock after checking his books over the weekend and found over $11,000 in receivables, much of it over 30 days.
Why You Need a Well-Written Contract
By Michael StoneA client decided to change the rules of their contract. She decided not to pay the full amount or on time as the contract specified.
Downpayment on a construction job
By Michael StoneGot a phone call recently from a contractor doing a job in the $150K range. Everything is fine, contract signed, and the job is going great.
Sending Invoices for Construction or Handyman Work
By Michael StoneInvoicing is one way clients delay paying. "Thanks for doing that work, send me an invoice, okay?" Why do contractors agree? Maybe they believe everyone does it.
Use the Right Payment Schedule
By Michael StoneIf you want positive cash flow in your construction business, make sure you're using the right payment schedule on your contracts.
Cost-Plus – A Homeowner’s View
By Michael StoneA very nice gentleman called me last Friday. He related a story about his home remodeling project. It was done a Cost Plus job, the "plus" was negotiated at 18%.
Payment Schedules for Cash Flow
By Michael StoneA good payment schedule keeps you paid for the work you are doing. If you're using a 1/3, 1/3 and 1/3 schedule, you are financing most of the job out of your pocket.
Contract Cancellations
By Michael StoneCancellations happen, even with the best of salespeople. Clients have all kinds of reasons to cancel an agreement, and you need to be prepared.
Making Selections for Their Project
By Michael StoneIf you're a remodeling or new home contractor, how can you get clients to make their selections before you write the contract? Make it easy for your client.
A Poorly Written Contract Will Cost You Money
By Michael StoneToo many contractors use a poorly-written construction contract, or no contract at all, leading to different interpretations of an issue.
We Want To See Your Receipts
By Michael StoneWhat if you agreed on a price, now customer wants all receipts for material? Without a clearly written fixed price contract, it's a problem waiting to happen.
Contracts – Dates, Times, Conferences
By Michael StoneMany construction-related disputes can be avoided with a well written contract. Here are a few of the things that need to be included.
Contracts to Avoid
By Michael StoneIf you are going to deviate from a standard fixed price contract, look at your approach from your client’s point of view. Make sure they know what to expect and what you’ll do.
Money Changing Hands
By Michael StoneIt's easy to ask someone to do something; it's harder to hand over money. Your client isn't committed until they've written the first check.
Contract Language for Client-Caused Damage
By Michael StoneWhat do you do when a client calls about a problem they created? Preventative measures make the difference between a profitable job and losses.
A Few More Contract Issues
By Michael StoneRetainage clauses, removing the finance charge clause on the last payment, “we’ll pay you when we get paid”.
Itemization Woes
By Michael StoneWe’d like to share an email received from an anonymous homeowner. If you believe that it’s smart to provide an itemized invoice, this will make you reconsider.
Documenting Jobs
By Michael StoneThere are two benefits to documenting your jobs. One is protecting yourself in case there is a disagreement about the project. The other is providing information that will help you when you’re promoting your business.
Maintaining Your Right to Lien
By Michael StoneAt least once a week I hear from someone who can’t get paid for work they’ve done.
Clients Wanting Cost-Plus
By Michael StoneMany building owners want a Cost-Plus contract because they believe they’ll have more control over the total cost of the project. It’s your job to educate them on the downside.
Right of Rescission
By Michael StoneWhen I’m working with a group of contractors, I often ask how many are providing a Right of Rescission form with their contracts. Many contractors aren’t even aware of the document or realize its importance.
Clients Changing the Contract
By Michael StoneI’ve written before about clients who decide to make changes to a contract. Last week I heard from two different contractors who had to deal with this, and I want to share their stories.
Cancelled Design Agreements
By Michael StoneA call came in from a friend recently. It seems that a client of his wants to cancel a signed design agreement.
Let Them Know What to Expect
By Michael StoneIf you’re doing service work, make sure your client knows what to expect before you start.
Cost-Plus with a “Not to Exceed”
By Michael StoneA contractor asked for my opinion on a request he recently received. It’s not a win-win proposition.
Dishonest Clients
By Michael StoneWe often hear from contractors dealing with a client who, for whatever reason, has decided to change the terms of their contract. Other professionals have the same problem.
Dodging Payment
By Michael StoneThere are things you can and should do when a client tries to dodge making payments.
Protecting Design Work
By Michael StoneA contractor who has designed projects asked how to protect his design work.
Handyman vs Service Agreement
By Michael StoneIs it a good idea to have a service agreement to cover small jobs under a certain amount?
Contract Language That Puts You at Risk
By Michael StoneOver the years, I’ve seen contract language evolve, shifting more and more responsibility to general and specialty contractors.
Final Payments and Guarantees
By Michael StoneWhen clients try to change the terms of the contract, you don’t have to go along.
Protect Your Time
By Michael StoneSome people are used to snapping their fingers and having others jump. It’s irritating, but you have to remember that they’re writing the checks.
Price Proposal Deadlines
By Michael StoneAll price proposals need a deadline because you never know when material and labor costs will increase rapidly.
Contracts Matter; Collecting Final Payment
By Michael StoneWhen you provide a dishonest client a cost breakdown of their job, things can go wrong.
Liquidated Damages in Construction
By Michael StoneWhen customers start talking about liquidated damages in construction, it’s time to ask why.
In Construction, Communicate the Details
By Michael StoneAre you giving your clients the information they need to be confident you’re building the job they want?
Changing the Terms of the Contract
By Michael StoneWhy do clients enter a contract and then think they can unilaterally change the terms?
Renegotiating the Price
By Michael StoneHow should you respond when a client wants to change the price AFTER the job has started?
Don’t Negotiate Your Price
By Michael StoneDon’t let your clients dictate or negotiate the price of your work.
Mistakes Cost Money
By Michael StoneI want to share a reminder of how little mistakes in your construction company can easily grow into big problems.