Replies

1. 
   Marcello | Nov 06, 2002 05:12pm | #1

   Woodrow,

   Normally, you would present the contract to them.  The AIA office (American Institute of Architects) may have contracts between General Contractor and Sub-contractors.  I don't know how "by the book" you want to do this in small jobs, but you can always get burned no matter how small the job is.  Typically you would pay them once a month after they submit an invoice to you for the work that has been completed and for the material stored on site.  If they want to invoice for material stored off site, insist on insurance papers and photographs of the material, or go take a look yourself.   The frequency of payment depends on how often you want to do the books.  Small projects, this is not a big deal since a few fixtures, conduit, pipes, j-boxes can be stored in the room itself.

   The contract may state that for every invoice submitted to you, you would hold 5% of it as a retainer.  This amount will be paid in full at the end of their scope of work or when you feel they have fullfilled their contract.  This way if they do not perform to the inspector's, or more importantly, to your satisfaction, you can threaten to use that retainer to hire someone else to complete the job.  This is typical, just make sure they understand what you are planing on doing before they sign the contract.  Make sure they understand the full scope of the contract so they don't hit you with adds during the process.

   Good luck, Marcello

2. 
   RW | Nov 07, 2002 01:51am | #2

   My first big mistake as a sub was not asking about exactly what you discuss. Raise the issue with them first. As their expectations, and discuss yours. Find where you're all on the same page and put it in writing. The "adds" thing goes both ways pretty easily. On real small stuff like a plumber who only needs to be there for a half day, I cut him a check before he walks out the door. But if it's in the thousands, I totally agree with a 10% hold until the job is a done deal and there's no immediate "warranty" issues. If those come up 30 days later, I would expect the appropriate party to handle it with a smile. Flesh that stuff out before anyone opens a toolbox and you save a lot of grief.

3. 
   JeffBuck | Nov 07, 2002 02:28am | #3

   I started subbing this year.....mostly for the company that laid me off....have done a bit more work for a coupla other outfits.....and have a few irons in the fire at the moment to start working with 2 more companies.....

   I wouldn't work for Marcello's arrangement. I sub tile/cabinet work and trim.

   I review the prints......check out the site..and work up my price. One of the recent offers will be T and M at that contractors request. The other potential job may work out to be hourly. I'm easy to work with...I'll go which ever way the contractor wants to go.......if I did my bid right......it's all gonna divide out just about the same anyways....it's all based on my same hourly figure.

   But...I probably wouldn't work on the contractors contract. I'd take a look see.....but I'm contracting that portion of the job.....so why not my contract? I'm the one doing the actual work....just makes sense to me......if someone pushed the aia contract...I'd most likely smell a rat and take a walk.

   I also would in no circumstances go by their pay schedule. I do the work...I get paid! I do the work quick...I expect to get paid quick. I could care less what kinda problems you are having with the homeowner...or what bills came up.......I did the work...I get my money....now!

   The rest of the world gets paid pretty much weekly.......I would never let a builder sit on my money for 30 days. I even structure my contract/pay schedule where I get paid for a completed phase BEFORE work continues into the next.

   LIke I said...I do the work...I wants me money!

   I get a percentage down.......I'm usually on site for a coupla weeks....so I get a 10% start check. If no check...the tools go back into the van.

   My current job had me finish a kitchen. I got the 10% to start. Then got the tile check the day after the tile was done. I started sorting the cab's...but wasn't doing any real work till the tile chack made it into the bank account.

   The cab's and details were to take about 2 weeks....so I had it in my contract for a cab progress payment...due 5 days after the cab's were started. The second half of the cab amount....will be due in full the end of this week......the very day that I'm done 100% with the cab details.......there is a column to go onto of the counter......I'm to get paid for that install also.......before the work is done.....as it's not my concern that the counter top isn't ready and installed......I've done lotsa work with them before...they'll trust me to come back...or be there....when the counter top is in place.

   The last portion of my job is punchlist thru out the whole house....I agreed to this to help them get the lead carp outta there and onto a new job.......and that phase won't start till the last cab check is in the account.

   I won't go any more than 2 weeks between pay's......my bills hit the mailbox sooner than that...and the kids gotta eat!

   I think if you want to attract and keep good subs...you better be prepared to work with them on their terms.....as long as those terms are reasonable and fair....and have that paycheck ready as soon as they are loading the truck up on the last day.

   One guy paid me early...his guys got their checks on Thurs....I was working till Fri.....but he gave me the full amount on Thurs.........

   Guess who get's my fullest attention the next time he needs a hand? Money talks...as does a guy that realises that a little respect goes a long way.

   This all might not be how the rest of the world does it.....but it seems fair to me....and is working fine for all involved. I work my sub jobs as close to my homeowner contracted jobs as possible. My sub to own work is about 50/50. Either way...I do the work...I expect payment on time.

   Not sure how subs that needed inspections would be worked into the equation.....something held back till it passes maybe......but no way 30 days after inspection!

   Jeff

   ..............Al-ways look on......the bright......side of life...........

                      .......whistle.....whistle.......whistle........

   
   

   ---

   Edited 11/6/2002 6:34:19 PM ET by Jeff J. Buck

1. 
   Marcello | Nov 07, 2002 03:44am | #4

   First of all, all contracts can get amended.  I don't expect anyone to sign one without reading it and arguing with it.  The aia contract have stood successfully thru the courts and are legal documents.  You would want to protect your interests as much as possible - there are no rats, only letters, it works both ways.

   The 30 day pay period is not rational on small jobs, I agree, and I respect your need to be paid more often than that, (my bills pile up just as quickly as the next guy).  But on larger projects when invoices are being submitted to the general every other day, he needs some type of control otherwise he would be submitting pay requests to the owner in a weekly basis, in a six month project, that is obnoxious.  It is entirely up to the g.c. and the subs to come to an understanding in small jobs.  In large jobs, you may not have a choice, but then you would be a bigger outfit and be able to have the cash flow required.  Again, it is up to you and the g.c. to work out your pay schedule: on a dayly basis if it works for both of you.  If a job is small enough that you get done in a week, then you should get paid when your work is done and everyone is satisfied with it.  No sense arguing there.

   10% up front I would not do unless a trust factor has been established.  It works for you because of the relationships you have established and the references you have; hey, all the power to you.  Not every sub out there is like you.  If the trust is established, I would not hesitate to pay a sub 50% to get going, but that is not the issue.  If the g.c. has new subs and is not familiar with the subs' ethics, it makes it difficult to fork out 10% right off the bat.  The 2nd job they do together, maybe, but then they know each other.

   What I described in my first posting is the norm on commercial and institutional projects.  Residential can vary some but the principles remain: cover your a__.  Every contractor is different, every project is different.  If you can get T and M all the time, you are the luckiest or best contractor in the business - it eliminates all the guess work in bidding and you know you have the work.

   Not all jobs are for all subs.  Economic times dictate what you can or can't turn down or weather is your contract or some one else's.  You are in a position now which you can choose, that is good.  You shouldn't have to worry about contracts untill the economy takes a turn for the worse.

   Good luck to you.  Marcello

4. 
   calvin | Nov 07, 2002 05:05am | #5

   Woodrow, here's is my method which has proved beneficial for me over the years.  It has kept me with dedicated subs that strive to produce for me, the homeowner and their own business.  Above all, make no excuses, tell no lies and be ready when you say you will.  Couple this with prompt payment (maybe even a draw if a few weeks from rough to finish), a fair schedule and fresh baked goods in the morning.

   I usually supply all the fixtures, supplies necessary for rough/hook up etc are supplied by the sub.  They never ask for up front money, they've been in business and have a good track record from their suppliers.  A draw after rough is offered, but usually on kitchen remodels/baths I'm calling them demanding the final bill.  I'm known to their book-keepers as the guy that wants a bill NOW. 

   Did I mention a contract?  Probably not.  I don't use one, they don't ask for one.  Pretty much they agree to do the work, I agree to pay.  I know that this isn't kosher in the business world but it sure as hell works for me.  I need a plumber, I can call 3 depending on the job location.  They come now.  Same with the electricians I work with.  Drywaller? you bet.  I can't begin to tell you how good they'll make you look when that kitchen that's been torn up doesn't sit idle one day.

   Course, first you have to find the good ones.  Then you develop a repore (sp).

   best of luck.

   __________________________________________

   Remodeling Contractor just outside the Glass City.

   http://www.quittintime.com/