Friday, March 16, 2007

Low Bids for Contracting

There’s a common practice in the contracting field. Low ball to get in, then make your money on the extras.

This is caused by low bid mentality on the part of clients and builders. It’s a situation where the contractor and the client both want the advantage in dealings with each other—potentially to victimize each other simultaneously. The client wants the builder not to make any money—the builder wants to make more money than the client may have at his disposal.

Sounds like a bad situation doesn’t it?

Further down the road, after the contractor agrees to do it for free to get in the door, then the price doubles due to omitted items in the quote and additional items sold or requested by the client, (recognize that most of these contractors won’t keep the client abreast of the true cost of the changes), and the client doesn’t have the money to pay.

The Contractor will face a cash squeeze when the final payment isn’t forthcoming. It’s superior court for this amount of cash—so you need a good lawyer. Before you get to court it will likely run 5-$15,000 in legal prep work. The proceedings may be delayed by a long docket or delays by the other side.

For the homeowner it means liens that put pressure on his credit and eventually a large judgment that could mean foreclosure or forced sale.

Who needs it!

Clients need to know that when you find a deck contractor willing to do a job for the cost that other deck contractors tell you they pay for materials—something is wrong. They will either use stolen materials, illegal labor, unpaid labor or simply never show up after taking a deposit, or complete the job part way after getting as much money as possible from you.

They may simply be bad business people—which means their warranty should be discounted due to the fact that they likely won’t be around to honor the warranty they offer on your deck or fence.

They may be using sub standard details or materials. They may not know how to build for durability.

We insist that all our builders be up front about the costs involved in projects. Its just part of fair dealings with clients. Sell your service and professional ability. When our builders quote a price—that’s the price, with everything included in the contract.

Sure, if the client asks for changes or more work to be done, we’ll offer a change order that outlines the additional cost so that the client can budget for it.

This maintains a non-combative atmosphere of mutual respect and is more likely to get you referrals in the future.

L
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