I’m wondering what clauses you have in your standard “time and materials” contract(s). Thanks.
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I've been keeping some notes on the same issue.
I have a new need to update.
Looking forward to input.
Remodeling Contractor just on the other side of the Glass City
Jimbo.
The proposed scope of work.
A "From-To" price.
Explanation of cost plus 10% of all the labor/material/subcontractors I provide.
The handshake.
A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
Quittin' Time
I can't take credit for the idea (saw some thoughful posts over at JLC forums a while ago), but all my contracts from now on will require payment in FULL before I'm obligated for any warranty or callback work.
Seeking perfection in an imperfect world is a fool's errand. Making something look perfect is a whole 'nother story . . . .
Just finished a T&M job and everything was great until I was asked to pay for some restocking fees for door hardware that was ordered in good faith, but for various reasons had to be returned.
Now I include a paragraph that explains that construction is not a perfect science and some scrap/waste and miss ordered material are to be expected as a normal part of construction. All restocking fees, cost of materials altered but not installed, cost of materials damaged in transit, damage done during construction storage, left over material that is not returnable, blaw,blaw, blaw, is to be paid by the client. I've heard of guys being back charged by a client for "waste" they thought was excessive that turned out to be unused portions of lumber in the scrap pile.
I've also gone entirely to a one week pay schedule and require payment imediately at the end of the week upon being handed the invoice or all further work stops and other jobs will be scheduled.
Anticipated material costs are paid up front, or at the beginning of the week in which they are purchased. All out of pocket expenses not previously covered will be included on the weekly invoice.
I also define what consumables are as well as other costs not normally thought of by clients (rental fees, fees of any kind, resharpening, any out of pocket expense, etc.). Normal wear and tear on clothing and tools is my responsibility, however, damage requiring replacement will be billed to the project.
The work week is defined as 8-6:30, 10 hours per day, monday through friday, with the explanation that any work on the weekends is at my descretion and if the client, subs, suppliers, building department permit approval or weather do not allow a full 10 hours per day during the week that the client will still be charged a full day.
It's also explained that I may be required to spend small amounts of time at prior jobs for punch list or warrantee work, as well as taking time off for bids and other activities required for procuring new work. Small amounts of personal time off are also at my descression.
I also include a statement that I won't cut corners that effect the durability or quality of finish. If problems (plumbing, electrical, structural, etc.) are uncovered in the process of remodeling they will need to be fixed properly before continuing.
Another portion of the agreement is that I'll be responsible for all aspects of the project, including the final finish. No more client paint jobs nixing nice trim.
I offer a lifetime warantee covering the installation, with the material warantee being that of the manufacturer. If the material fails despite a proper installation then the client has to take replacement up with the manufacturer and pay to have it fixed.
Those are a few of the not-so-standard parts of my contract.
I'm at the end of a 200K T&M addition, but as the customer. Because I like and respect my GC, I haven't looked at the contract since we signed it, but it was pretty minimal. It did have an arbitration clause, but does not arbitration with AAA. It provides for me to pay attorneys fees in the event of non-payment and requires the GC to provide lien waivers at substantial completion. We pay subcontractor invoice cost plus 10% and 10% mark-up on all material. Given his contractor discounts on a lot of stuff, I'm probably paying less for material that if I purchased it.
One thing I don't think has been mentioned is the need to spell out that the homeowner owns the risk of fire or other calamity that might occur before completion.
I tell my clients that a contract is like life insurance-you hope you never need it and if you do need it, it means you have a big problem. Better to have a bad contract with a good contractor than vice versa.
The GC was OK with my purchasing floor tile and hiring someone to install it. I saved a bundle on 1100 square feet of slate by buying it from the manufacturer and spent what I saved by getting an expensive, but very skilled, tile installer. I'm doing the cabinets myself-big pressure to make them look good, as the rest of the finishes are really nice.
It has helped that I know a bit about construction, since typical homeowners don't always understand what a GC does.
One thing I don't think has been mentioned is the need to spell out that the homeowner owns the risk of fire or other calamity that might occur before completion.
That's a good point that most people don't give much thought to--on both sides.
Last summer we witnessed an electrical fire in an extention cord that really made an impact in the way I now treat such things. Unnerving.
Better to have a bad contract with a good contractor than vice versa.
If better advice has ever been given I haven't heard it.
Yeah, I'm with trout "...spell out that the homeowner owns the risk of fire or other calamity that might occur before completion." is an excellent point. That's something I have never considered.
Easy enough to add a sentence to make that point. Thanks. Tipi, Tipi, Tipi!
http://www.asmallwoodworkingcompany.com
There are some fairly deep wrinkles in these insurance issues. I've read that it's advisable to have your company named as a 'loss payee' on the owner's insurance policy.
A job may be damaged or destroyed in progress, and if so the owner will likely be paid a settlement by their insurer. However, they are not necessarily going to turn around and pay you whatever is owed on the job at that point. They may need the money to take care of the many consequences of a disaster. They may either be strapped, or they may abandon you for the time being.
Since you are probably owed at least some money, and possibly a lot of money, at any given time during a job, you have a financial stake in what happens if there is an insurance payout. Being named a loss payee means that the insurance company writes a check jointly to you and the owner.
I have not talked to my attorney about this, but I intend to. At the moment my contract states that the owner is responsible for property insurance, including builder's risk (meaning my potential loss and that of my subs and suppliers if their property is damaged or destroyed), and that the owner takes title to any materials delivered to their property whether installed or not.
That's it?
No "terms of payment"? No "warranty"? Tipi, Tipi, Tipi!
I verbal the terms of payment. I want x dollars tomorrow.
Warranty?
Well, those on the same block-lifetime.
Those I've done work for b/4-lifetime.
Those I like-lifetime.
All others, I warrant as I deem necessary and honorable.
None of this one year stuff for me.
And oddly, nary a call back.
no joke.
you don't make any money on call backs.
A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
Quittin' Time
in no particular order:
labor rate..+.... matls & subs at cost plus 25 % ( insurance company standard around here )
Construction Industry Arbitration Clause
Lien notice in RI, no notice , no right to lien
right of recission
no written warranty
scope of Work
site requirements ( bath facilities / portajohn ), normal working hours , access
notice of insurance that we carryMike Smith Rhode Island : Design / Build / Repair / Restore
"Construction Industry Arbitration Clause"
What is this, Mike? Is this through BBB, or an industry standard, or what?Tipi, Tipi, Tipi!
google on American Arbitration Association ..
then go to the Construction Arbitration..
also i can send you the clause i use in RIMike Smith Rhode Island : Design / Build / Repair / Restore
Actually a reply to ALL.
Using your post as a reference.
That's how I would normally do it.
I have a job right now with no scope. - I have no idea where this will end up, or how long.
So I was thinking I should have a more standard "form letter" type of paper tool.
Something that states;
Hourly rate
One way travel
Mat, subs, rental tools, permits, any other $ outlay -- plus X% ?
Define billable time - purchasing/delivering materials ?
Services generally offered/included - insurance, garbage removal, ?
Still working on my list of included information.
I'm thinking of like a policy statement to give some parameters to start from for new customers or drop in service calls. Just keep a stack of them in the van for t&m jobs.
I've always just stated per hour price - done the work - and billed it, never had any problems. It just seems like a good idea to have all the info out in the open right at the start. And written in black and white.
Remodeling Contractor just on the other side of the Glass City
Jim, I can email you my contract if you send me your address. Since you're in the same state it should actually apply.
Got your e mail, David. Thank you. I'll take a close look at it this weekend.Tipi, Tipi, Tipi!
If you steal the materials you do the time!
Is that what you are looking for.
As a HO I would expect it to include a definition of "time".
Unless it SPELLED OUT in the contract then time is from the minute you walked into the door until the minute that you walked out of the door.
Another think is what kind of documentation that is available to the client as to costs.
Bill. Time is Time spent on the project. That does include other time than what is spent "in the door".A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
Quittin' Time
I agree, but unless it is spelled out in the contract it is a place for miss-understanding. Speically if it requires large amount of shop time, design/permit time, ordering special materials, etc.Does that include commuting time? Two "honest" contractors could handle that differently. One yes, the other one no, but have higher overhead rates to account for that lost time.
good points , bill...
without overloading the contract, there should be a discussion of billable time.. and another point of contention is who gets charged for breaks, we always charge for all the time charged to the job
and when guys are using the facilities, or on a coffee break, they are still on the clock.. lunch time they are off the clock..
and also with out overloading the written contract there should be some show and tell about what kind of documentation the owner would like..
i prefer to list all invoices charged to the job and their individual amounts. and i make it clear that the owner is welcome to have copies of any invoice they would like.. but i do not include them in the billing package unless they are requested
our T&M contracts are typically one page .. with a lot of info on that page.. our invoices are also one page
after the first series of invoices and payments i also do a Statement..
normal billing time is not charged to the job. it is overheaad with us.. in larger firms billing time and bookeeping are often charged and billed to the job...
any personnel charged to the job, but not physically on the job, should be discussed and enumerated in the contract
professional services required by the job should also get a mention in the contract.. and the building permit and any other permitsMike Smith Rhode Island : Design / Build / Repair / Restore
this is going to sound stupid, but I made the mistake of working for a lawyer, I KNOW, IKNOW, but he bitched about paying for consumables, like saw blades....so we include them specifically in the contract now.....
this was on a fire job, that we really couldn't get a full handle on the scope till we got in there, and started riping stuff out. we parted as friends, at the end of it all though....
i work for one lawyer.. and no problems...great customer
i hear you though.. if one decides he's going to take you to task... you can hang it up.. unless you have an Arbitration ClauseMike Smith Rhode Island : Design / Build / Repair / Restore
If I can add a question...
What about mistakes? If a wall needs to be moved 12" during framing do you stop the clock once the sawzall is plugged in? We only do isolated T&M jobs, so for us this issue has never been resolved.
I have a feeling what most will say, but still I'm curious.
Jon Blakemore
RappahannockINC.com Fredericksburg, VA
With the HO* hat on I take that ask part of the risk of using T&M vs a fixed price that would have cushion for mistakes and unknows built in.Now that assume "normal" mistakes and not someone one that is just doesn't know what they are doing.* I am starting to do some handyman work and just finished a remodeling a house to flip, but that was on a paid if when sells bases and the profit depends on the sale price. So most of my experience as been as a HO.
A great reason to avoid large t&m jobs. The owner generally expects that only the 'productive' hours are charged. There can be some latitude is they feel that you are generally very efficient and don't waste anything.
Personally, I have two prices. I can charge you price 'A' if you want to buy all 40 of my hours this week. Or, I can charge you price 'B' if you only want to buy my best ones.
Mistakes happen. It's part of being human.
That said, I have done work at no charge to the customer more than once on t&m jobs. It just depends on if it's a "could have happened to anyone" type mistake, or a "what the f*ck was I thinking" type mistake.
If I have an employee on the job and s/he does something boneheaded I pay that person to fix the mistake and usually don't charge the customer - again though, it depends on the nature of the mistake, degree of difficulty, reasonable expectation of 100% success rate.
It's tricky, Jon, but I try to be fair, while erring in favor of the customer.
Tipi, Tipi, Tipi!