Trying to come up with a list of possible paypoints. It is always easier to consolidate than expand so if wanted to, I could, IF, I have all the details first.
Can you guys look this over and let me know what you think. A payment could be due at the completion of any paypoint.
There could be extraordinary delays between consecutive tasks.
TIA,
SamT
Start or On Schedule Payment
Legal
Site survey
House
Excavation and Soils Engineer
Footings Ready for Rebar
Footings Ready for Pour
Utilities Excavation
Slab Base Ready for Details
Slab Ready for Pour
Walls Stripped and Ready for Finish and Drainage.
Walls backfilled and ready for Finish Grade
Done
Garage
Excavation and Soils Engineer
Footings Ready for Rebar
Footings Ready for Pour
Utilities Excavation
Slab Base Ready for Details
Slab Ready for Pour
Walls Stripped and Ready for Finish and Drainage.
Walls backfilled and ready for Finish Grade
Done
Driveway
Excavation and Soils Engineer
Base Ready for Topping
Done
Edited for clarity. st
Edited 8/14/2005 12:20 am ET by SamT
Replies
no offence, but my first thought is.... if i was on the buying end of this contract, i'd be concerned about you needing to get $$ after every small step... i.e. are you solvent enough to keep in business to see my project through to completion.
I no nothing about you, other than your posts here...a prospective client may not even know that much. Asking for such a payment schedule would set off a little warning in my pea brain.
ProBozo,
Well, ya see, that's not the contract. That is the starting point of negotiations. It happens to be ideal for me, the contractor, but I expect to concede things as the wheelin' 'n' dealin' goes.
The art of the deal is to make both sides come out feeling like they won. Gotta have something to give up. I can't give up money, unless they are willing to give up quality and lose my garuntee.
The spread sheet is already set up to automatically update payment amounts as payment periods are removed.
Like I said, it's easy to consolidate, AFTER one has all the details.
SamT
SamT - "I want to be paid before work as much as possible. That's OK here."
Just because it isn't illegal where you are doesn't mean it's appropriate. I think getting materials deposits is entirely okay but paying for the work before it's done is outright out of the question.
While I do belive in a system of smaller micro payments with clients (Getting the Final Payment: Timely payments for scheduled phases keep the last check small and manageable
JLC October 1999
By Brian Sutton). I think it looks like you're perhapss carring it a little to far. Plus I think you'll find that your system will only work if you work the tasks precisely in the order that you have them laid out which rarely happens in real life. You see if you real the Brian Suttons article that he has a clause that reads:
I think I should add to my statement above about it being okay to collect materials deposits ahead of time that doesn't mean if you hav a job that's going to span a year that the materials deposit for the trim and paint should be invoiced and collected at the start of the job. Instead I think you should invoice for it when it comes time that you need to get those materials on the jobsite.
"Payment Schedule Peer Review "
Peer Review? What's that all about?
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>> ... but paying for the work before it's done is outright out of the question.Why is that? If I buy gas late at night I pay in advance. If I rent a house I pay each month's rent in advance. If I go to a movie or a concert I pay in advance. If the customer is willing to pay up front, I don't see any problem at all with it.In my business I've heard of consultants and contractors demanding and getting retainers from financially shaky customers. I'm sure the customers don't like it, but when the alternative is not getting the work done at all, you gotta do what you gotta do.
UncleDunc - "Why is that? If I buy gas late at night I pay in advance. If I rent a house I pay each month's rent in advance. If I go to a movie or a concert I pay in advance. If the customer is willing to pay up front, I don't see any problem at all with it."
Your kidding me right? I should pay my roofing sub $16,400 in advance for the roof he's going to do for me? We should get our clients to pay $65,000 for their stairs in advance? Ya gotta be kidding me,... what kinda fool am I. With your examples of gasoline, a movie, rent, a concert I am 100% sure I am going to have my product delivered as I ordered it for when I ordered it plus your talking about $100 or less in those examples. Come on...I laugh a contractor out of my office if they asked for 100% up front.
There's a well known branded roofing and siding contractor in my area that advertises on cable that they wont take a cent of your money until you are 100% satisfied at the completion of your job. No down payments. Now I think that's risky and going overboard to the other extreme but how's a contractor who wants a front loaded payment schedule going to compete against that.
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Jerrald,
I don't think UD was talking about 100% upfront, but if he was, with you 100% behind I am.
I just want enough up front to cover upcoming material and labor, enough down behind to cover OH allocated to that work, and I'll take my profit on the final.
When I asked for peerr review, I just wanted to make sure I hadn't had a brainfart and left something critical out.
SamT
Jerald,
I do appreciate your taking the time to respond as I really think highly of your business accumen and advice.
I am having a hard time trying to understand wht you are saying. Other than you think it is immoral to accept payment before rendering services.
You said that the system will only work if work is performed in the order listed. Uh that is the exact order the work must be performed in for each unit, house, garage, drives. Ooops! The "Slab ready for pour" should come after stripping the walls. Thanks for bringing that to my attention. I have swapped them in the SS.
As to getting prepaid for paint and trim at the start of the job, if you will notice, the next to final payment was planned to be just before backfilling the stemwalls. I don't really think that building a foundation will take a year.
I did not say anything about owner/builder DI himself work, because it just wasn't germane to creating a comprehensive payment schedule that "is always easier to consolidate than expand so if wanted I can do so, IF, I have all the details first."
I suspect that some O/Bs will want to perform some of the tasks themselves, which will both negate any payment for that task and set me way behind in payments if they take a while to perform and I have consolidated the schedule around that task.
SamT.
SamT - "I am having a hard time trying to understand wht you are saying. Other than you think it is immoral to accept payment before rendering services."
I think unethical is a better phrase than immoral. And I think that front loading could possibly cause potential clients to wonder about and question your financial solvency as ProBozo was inferring.
"You said that the system will only work if work is performed in the order listed. Uh that is the exact order the work must be performed in for each unit, house, garage, drives. Ooops! The "Slab ready for pour" should come after stripping the walls. Thanks for bringing that to my attention. I have swapped them in the SS."
Sam I didn't think your schedule was that specific and my point was more general. I figured that wasn't a specific job and thought is was just a hypothetical example of building project in general because of things like you didn't even mention framing and you've got the foundation being backfilled and graded before the first floor is even on. Well your talking about a slab anyway so that's a moot point. So what are you going to do have another template for houses with a basement In fact I'm not really sure what you're doing. It seems like you building templates for every possible phase of every possible project you might do? That could take a while. I think your better off designing the schedule for each project as it comes along and building a template library that way rather than trying to cover all the bases for every possible project in advance.
Still though the problem is projects with any kind of complexity in their task dependencies rarely move along exactly in the order or speed they were laid out and planned. Projects are rarely purely linear where you do one task and then the next task. The tasks move along multiple paths and sometimes those path get delayed or stalled. They often look more like this. That's why I brought up the clause mentioned in Sutton's article. We just completed one project in fact where instead of the tasks going 1-2-3-4-5 they went 1-3-4-5-2 and the one I am on right now is going like that too. In fact it may be going more like 1-4-5- and over the next two weeks we'll do 2-3 (rebuilding an ancient greenhouse).
"As to getting prepaid for paint and trim at the start of the job, if you will notice, the next to final payment was planned to be just before backfilling the stemwalls. I don't really think that building a foundation will take a year."
I was talking about the whole house not just the foundation. I'm sorry I thought you were too. Is all you're doing the foundation?
"I just want enough up front to cover upcoming material and labor, enough down behind to cover OH allocated to that work, and I'll take my profit on the final."
I'm still ethically opposed to the idea of billing for labor before it's performed and regardless I think at the absolute bare minimum you need to have at least a months expected cash flow in the bank as capital before you should undertake any project or business. If you need them to prepay for the labor then you're really not ready for the job. (Been there done that. In retrospect I now see how bush league I was back then and lucky I made it through.) You should really be practicing a kind of Earned Value Management. The client gains something, a completed phase of work, and they pay for it.
Still I guess I'm not really to clear about what your trying to accomplish. Are you just a foundation/masonry contractor? And what's this "peer review" thing?
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Jerrald.
>>you didn't even mention framing and you've got the foundation being backfilled and graded before the first floor is even on.
Not my job, I just have to wait for the framer, probably the H/O is the framer.
>>It seems like you building templates for every possible phase of every possible project you might do?
Yep. They all only invlove the footings, basement walls, and basement slab, plus maybe the garage foundation and a driveway. With that linited list a template sounds best to me.
>>Still though the problem is projects with any kind of complexity in their task dependencies rarely move along exactly in the order or speed they were laid out and planned. Projects are rarely purely linear where you do one task and then the next task. The tasks move along multiple paths and sometimes those path get delayed or stalled. They often look more like this.
Huh, My last employment before leaving Calif, had a Gannt chart with mutiple pages that was 8' long and stacked over 12' high. As the Supers' Lead, I dealt with some real multitasking/
>>I think at the absolute bare minimum you need to have at least a months expected cash flow in the bank as capital before you should undertake any project or business.
That jest ain't gonna happen. I am no longer employable at a decent standard due to age and disease. Either I jump in on a shoestring with both feet and a good plan to keep the biz alive or I shoot myself right now. As soon as feasible I will move to backcharging. Better marketability.
>>Still I guess I'm not really to clear about what your trying to accomplish. Are you just a foundation/masonry contractor?
Yes. at least for the first 18 months to 2 years. There are certain triggers/milestones at which I will move into: 1st radient heat; 2nd framing; 3rd plumbing, and finally GCing customs and Specs. I also have alternative paths built into the Biz Plan. Depends on opportunities and economics.
>>And what's this "peer review" thing?
I figger I ain't not that much better than youse guys that I can't be callin' you all my equals (|:>)
SamT
Okay now I get it. We're the peers you are talking about. I'm actually working on a 360 peer review database for a company which is where the employees in the company review and critique the performances of the people they are working with so I couldn't figure out what you were getting at. I guess that shows how our own experiences taint and influence how we look at things. I never thought for a second what you were getting at.
Regarding your response to my saying:
So your not really in business for your self at this time as a contractor but you getting set to go out there and give it a go. Are you planning to do this work in house with you own employees (and equipment) or are you really going to be acting as the agent/project manager/broker of these masonry and concrete services? I'm thinking if your a agent/project manager/broker a better way to approach this might be to use something like or similar to a AGC 510 Construction Management Contact Contract which is described as "Standard Form of Construction Management Agreement Between Owner and Construction Manager (Where the Construction Manager is the Owner's Agent and the Owner Enters into All Trade Contract)" That way you wont be on the hook directly for paying for all the actual labor and materials, your client the owner builder would be. You'd be acting as their agent and collecting a fee for that and any other value added services you can bring to the table. I think that's a lot like how Ubuildtit works.
I think going into the masonry contracting business which has a fair amount of capital investment in equipment probably isn't the best idea if your short on capital.
And once again you've lost me and I don't know what your refering too. What does "As soon as feasible I will move to backcharging" mean. I'm thinking one thing (which I don't like the sound of) but you might be saying something else.
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Jerrald,
Uh, "backcharging" I meant "down back" charging as opposed to "up front" charging. Down back would be charging after performance. The regular way, ya no?
Capital Equipment can be rented at 30 same as cash and I have a line on labor at 14 same as cash. I am buying hand tools and safety equipment 'up front' ;)
Mind you, all this is just to get started, I am budgeting beans and rice for myself until I bank the first profit without it being pre-promised to labor or equipment accounts.
I don't expect this to be easy, merely possible. And risky, but a man's gotta do what a man's gotta do to deal with life.
SamT
Sam..
" My last employment before leaving Calif, had a Gannt chart with mutiple pages that was 8' long and stacked over 12' high. As the Supers' Lead, I dealt with some real multitasking"BTDT, I think Jerrolds' point was that thing can end up out os sequence, sc!!!g up you nice speadsheet draw schedule...."That jest ain't gonna happen. I am no longer employable at a decent standard due to age and disease. Either I jump in on a shoestring with both feet and a good plan to keep the biz alive or I shoot myself right now. As soon as feasible I will move to backcharging. Better marketability."Well, we all gotta start -or start over-somewhere...keep in mind that some jurisdictions require escrow on payments...generally not enforced/monitored, but if you get into a sticky situation someone might come looking...Bottom line, the map is not the territory....the spreadsheet is not the job....stick to the tried & true waypoints....i.e. groundwork done, framing done,etc....you can break it up a little finer, but too much & it becomes self-defeating
My feeling is that there are too many steps. You will be coming to them with a bill too often. I would consolidate a few that I can see right away... footings ready for rebar and footings ready for pour go together, i.e. one payment after the pour. It shouldn't take more than a couple of days to throw steel in there, so why go to them two days apart with bills? Likewise for the slab... form, detail, and pour it, and then bill.
It would help me to know how many total weeks this work will take. I set up my schedules so that I get a payment about 3 times per month. There is almost no one I have to pay on the spot, so I can always meet my obligations if I get paid by the middle of next week for what I did this week, even if 10 subs came to the job and worked their butts off.
Anyway, set it up for one payment per week, max.
David,
The spreadsheet is set up to allow any of those points to be or not to be a paypoint. It automatically sums all amounts between any tasks set as paypoints. I can subtract items as needed as long as I have all of the needed ones there first.
If I sub to any professional GC, I will expect one payment on completion. I will also expect him to pull all legal docs, and provide the excavator and soil engineer if desired. I wouldn't be surprised if he used another waterproofing sub.
Contracting to a H/O, I will keep inspection and approval rights on all work done, including any underslab trenches, because I am garunteeing my foundations. If I have to give up that right, they must give up my garuntee.
SamT
I think as a HO I would find that payment schedule too complicated. If I were signing a deal where payments were based on milestones I would want them to be fairly simple and easy to verify.
Maybe a 'percent complete' system would work better. You can bill every week based on the percent complete in each area of work. That means you have to assign a dollar value to each area of work, but once done you have a simple mechanism for billing. Example:
Phase Value % Complete Amount Due
Excavation $4500 50% $2250
Formwork $3000 35% $1050
Rebar $1200 20% $240
Concrete Pour $5000 0 0
It's up to you to determine the percent complete and submit the bill each week. I have used this system on a few jobs and HOs have been happy with it. Usually the format is a weekly meeting in which we walk the job and discuss the completed areas.
Thanks David,
That is helpful.
SamT
My business (urban remodeling) is different than yours. If I were the G.C., I'd take your proposed payment schedule, smile and be on the phone with someone else before you got into your truck.
We all have cashflow concerns, what we do is collect a +/- 5% scheduling deposit, 1/2 at signing and 1/2 due 14 days before we start. We bill after the first week to cover demo expenses then, about 3 times a month (average project 10 weeks) after that. I try to keep 10% ahead of expenses, i.e. if the previous interval's costs +overhead is 5500 and the next periods c+o is 6000 we bill 6100. 10 percent isn't much, but it helps.
Jim
The awful thing is that beauty is mysterious as well as terrible. God and the devil are fighting there, and the battlefield is the heart of man.
- Fyodor Dostoyevski
Well, if you're a GC, you won't be talking to me, 'cuz you are not in my target market.
And If you think I'm not charging enough, or billing often enough, why would you call someone else?
However, my request was for a simple check to see if I had identified all possible paypoints.
I think I will edit it to insure that that is clear.
SamT
I agree with David. For periodic billings, whether once a week or once a month, you cannot beat the simplicity of the "schedule of values" method, with billings based on percentage of completion.
The schedule must identify, clearly and simply, work elements that can be understood, recognized, and inspected.
Most importantly, the owner should walk the job to witness and agree on the percentages.
Guys,
I'm just not that great a commincator, but I keep trying. Maybe I'll get better at it when I grow up.
Perhaps I should have given more background.
My targer market is the Owner Builder, A DIY'er. I must have the ability to be flexible while still delivering a product that meets my standards, as I will be garunteeing the finished product.
I build footings and foundations. Basements. Flatwork is a sideline. We don't have many concrete drives here. Mostly gravel.
O/B DIY'ers want to be hands on.Some things on the list will not be paid for.I will have no control over the O/B production rate.Some items listed will be O/B performed.The O/B might take weeks to perform a one day task.I might complete the entire job in 1 week.My schedule on the job can be interupted at any point by the O/B for some length of time.Some things, I will not allow the O/B to do.Some times I will schedule payments by time.Some times I will schedule payments by % completed.Some times I will schedule payments by phase.Some times I will schedule payments by interuption, ie, O/B wants to take two weeks to set rebar.Some times I might have to schedule work by available O/B funds. Heaven forbid.
This list is supposed to help me in thinking when I have to create a schedule of payments for a job. Then I can cut and paste as needed.
Plan to succeed or plan on failure.
Anyway, I do appreciate all of you taking the time to help me. I hope I can be of some small help to some of you in the future.
SamT
SamT,
Allow me to clarify, unless it's a 150k + foundation, 18 billings is, IMHO, is excessive.
Jim
The awful thing is that beauty is mysterious as well as terrible. God and the devil are fighting there, and the battlefield is the heart of man.- Fyodor Dostoyevski
What are you talking about?
SamT
I think what he's talking about is your original post, which appeared to be 18 points at which you would bill the owner. That's what I thought too. You have since explained that they were only potential points, and that not all of them were going to be actuals. That only made the whole thing more confusing for me.
What's the current plan?
Ask for payment as needed to keep from having any long spans of work not paid for.
SamT
Then you're basically going with a percentage complete setup. I would define it in the contract as such. The plan laid out in your first post has too many milestones.
What did I do wrong?
27 posts.
Asked for the same help 4 times in 4 different ways.
Rewrote the original post.
Explained the whole situation twice.
Never got one response addressing what I asked for.
All that is evidence that I am not communicating. I am doing something wrong, and I don't have a clue what it is.
I really have to reevaluate my communication techniques. I thought I was a good writer, but if even people as intelligent as you are don't understand me, it's obvious that there is a problem.
Thanks all of you for trying to help me.
SamT
"What did I do wrong?"
Against my better judgement I'll take a crack at rephrasing your original question ;>)
I'm targeting the owner/builder foundation market. Due to the lack of a pro GC on the project, I'm concerned about O/B inspired delays affecting my work/cash flow. Here's a list of the possible paypoints on a typical job: ...
Where would you invoice?
In addition to the normal pay intervals like footing inspection, I'd invoice wherever and whenever you stop working and have to wait for another trade or the O/B to perform before you can continue.
Owner/builder work can be rewarding or frustrating. In my experience if they don't keep the project moving, subs quickly drop them to the bottom of the list and the delays just snowball. I imagine with high $ capital equipment that costs real dollars to transport you really need to keep on top of work flow/billing.
I hope I got it right this time ;>)
Jim
The awful thing is that beauty is mysterious as well as terrible. God and the devil are fighting there, and the battlefield is the heart of man.- Fyodor Dostoyevski
Thanks, Jim.
SamT
And against my better judgement, digressing from the original question, I want to respond to this (edited) list of stuff that Sam named earlier:
O/B DIY'ers want to be hands on.I will have no control over the O/B production rate.Some items listed will be O/B performed.The O/B might take weeks to perform a one day task.My schedule on the job can be interupted at any point by the O/B for some length of time.Some times I might have to schedule work by available O/B funds. Heaven forbid.
Every one of these thing would be a major problem for me. I would not be able to run my business efficiently with this stuff in the mix, in fact I specifically prevent as much of this as I can.
Here are the ones I like:
I might complete the entire job in 1 week.Some things, I will not allow the O/B to do.Some times I will schedule payments by time.Some times I will schedule payments by % completed.Some times I will schedule payments by phase.Some times I will schedule payments by interuption, ie, O/B wants to take two weeks to set rebar.
Sam, you will be better off if you do not structure your business to allow so much freedom on their part. Define your part of the work, exclude work by the owner on parts that you are responsible for, do your job quickly, be done, get paid. Specifically, the owner should perform no work on your part, and no work during your part. Too bad if they want to set rebar. That is specifically something you should do if you are a concrete sub. They can work before you get there (as long as you are allowed to complete and bill for work that they do incorrectly) and they can work after you leave (you define what it is you are leaving for them). Anything else will be a major headache, more of a headache than contracting already is.
I go to great lengths to take complete control of my jobs and the areas where they happen. How can you have responsibility without control??