get it in writing, Builder's Contracts

Advice to subcontractors and small builders regarding builder's contracts and construction documentation.

What follows is a friendly chat rather than hard advice. It is aimed at young, just starting small sub-contractors and general contractors building one or two houses at a time. Also it could be useful to anyone making the jump from working on wages to "going out on their own" in the construction industry.

Short and sweet, in four words. Get it in writing.

There is a lot on the web about this highly complex subject, but for anyone making the jump from working on wages to "going out on their own" I would advise them to go to a local small business advisory bureau. They know your local conditions and they will help you in many ways to start on the right track. Many small start up businesses are run by excellent and qualified people, that is they are qualified plumbers, electricians, or to build roofs and even houses. Yet they still just struggle along because they either ignore or just have never learned any basic good business principles. I've been there and done that!

The whole idea of what we do is to use our skill and knowledge to make a living for ourselves and our family. We need to make money! We may also make good friends and gain a good reputation, but that is of no use at all if we lose money in the process.

When I hear people telling me how they have huge amounts of work on, I can't help thinking that "any fool can win builder's contracts. The trick is to get them at the right price and then to bring them to completion with both parties happy. The client with a good project completed and the contractor with his expected pay out with no complications.

It is an unfortunate fact that complications do occur and in many cases they can be caused by not keeping up with the paperwork.

Give accurate quotes in writing.

If you are quoting on a small job you owe it to yourself and your family to do it right and with enough detail in the quote so that there is no confusion over the scope of the work. Then put it in writing. I am not about to go into technicalities here but on larger jobs there is no substitute for a correct builders contract that is relevant to your particular area and jurisdiction.

By making a detailed quote and not the usual open ended thing that still requires further questions and answers you are showing a level of care and professionalism that will give the client a good impression and it will place you in a better position in their eyes than your competitors.

for larger jobs use a proper builders contract document.

Here I could list many instances of things going wrong but to keep it brief I will only give you one, but believe me people get very creative when they don't want to pay.

• A good friend of mine had to go through arbitration and had a year of stress before he got a full payout.
• The reason for this was that halfway through the job his client who was a senior government adviser had to return to the salary of lesser mortals when his party lost an election. He no longer had the same income and did everything possible to try not to pay the full contract amount!

So, when something unexpected happens you will be glad if you have the protection of a good builder's contract. It is your first line of defense when the crap hits the fan!

keep on top of extras.

Luckily I have never had problems with any work that has been covered by standard builder's contracts. Where I have run into strife quite a few times in my early days not keeping a clear accoun of extras. working for private people I have had to reach a compromise and lose money as a result.

• It is all to easy to have a chat with a client at the end of the day and fall into the trap of giving verbal quotes for extra work. Don't do it! I advise you to not even give "ball park figures" but to work out the quotes at your leisure when you are not under pressure. Then once again give the price in writing.
• Also for every extra that you quote on do a total of the previous extras and add them to the contract total. Make sure that the client is fully aware of all the costs. Believe me if you and your client do not keep close watch on extras they can lead to disagreements at the end of the job that you just do not need.
• It is human nature for clients to do their own small estimates of how much extra work may cost. It is always the same story, they accept a total contract price maybe for a few hundred thousand dollars that includes legitimate amounts to cover overheads and profit, yet when they figure out the probable costs of extras they really have no idea of how much it costs to run a business and so you must explain to them the basis of your quote and then get them to agree to it or not. Full stop. Do not go ahead with any extras over and above the contract price until you have that agreement.

keep a diary

Another lesson that I learned the hard way was to keep a diary. I am not talking about anything fancy here but just a simple record of day to day activities. It is easy to do but often forgotten.

• Writing down details when they are still fresh in the mind is easy. Not so easy is trying to remember them three months later without a diary to refer to.
• Write down details like when orders are placed, quotes from suppliers and any delays that are caused by others that could turn out important in the event of later making a claim for an extra or an extension of the contract time.
• Another aspect of keeping a job diary is that the actual fact of taking the time to sit down and write is also in itself a great memory jogger that brings to mind things that may otherwise be overlooked.

builder's contracts and other forms are readily available.

To practical hands on people all this talk about writing and documentation can be a bit overpowering. It does not have to be as there is a wealth of information and pre-printed forms out there to help you. Just check out your own area as the regulations and legal requirements change from place to place. For example my friend Dianne has a site that is totally dedicated to providing every form and type of builders contract that anyone working in the California construction industry will need.

So, to sum up, once again. Get it in writing!

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