Friday, October 30, 2009

What's in Your Contract?

Mike had built an elaborate deck for Mr. & Mrs. Smith. He always orders more material than he needs, not only in anticipation of the inevitable defective boards but because his aesthetic standards are high and wants plenty of choice. (His supplier restocks his extras at no charge because Mike is an excellent customer.) So by the end of the Smith’s project, he had accumulated a fairly good-sized stack of leftovers. After completion Mike scheduled a time to walk the project, pick up the final check and haul away the excess materials. But when he showed up he was surprised to discover that the neat pile of boards was gone. When he asked Mr. Smith what had happened, the homeowner shrugged and claimed that they must have been stolen. So they proceeded with the job review and Mike got his check; but as he was leaving he happened to glance through a garage window and saw his lumber stacked inside.

When Mr. Smith was confronted, he defended his actions by claiming that he owned the materials because they were delivered to his house for his deck. No amount of argument could unwind Mr. Smith’s rationalization, so Mike decided just to let it go. But he made an angry mental note to add a clause to his contract putting in black and white what reasonable people would take for granted.

How many painful lessons like this have you learned on the job? Have you ever had a customer refuse you access to his house electricity, or try to get one of your employees to do side work? What if you discover a rotted band board after you strip the siding off, or hit an underground tank while drilling a footing hole? Ever had a customer give you a new punch list every time you complete the last? The list goes on. If you’ve been in the contracting business for more than a few years you’ve encountered a host of unforeseen situations that have cost you time, or money, or your customer’s goodwill… or all three.

Knowing that, I’m amazed to see how many contractors still use the same old generic proposal form from the stationery store. Last year I had a new furnace installed, and the two-man HVAC contractor gave me one of these proposal forms as the contract. It didn’t meet state licensing requirements much less deal with the kinds of issues described above.

Because I’m an eminently fair-minded person (with a deep sympathy for the travails of contractors), I didn’t cause any problems for these young guys and would’ve dealt fairly with them had there been problems with their work. But life’s too short to count on dealing with nice guys all the time. It only takes one bad apple to put a well-meaning but na├»ve contractor out of business.

If it’s too much effort or cost to develop a custom contract for your business that anticipates and resolves conflicts caused by recurring problems, why isn’t it too much effort or cost to deal with the rump end afterwards? Talk about whistling past the graveyard! If you haven’t done so already, sit down and think about the bad times; what could you have done to avoid them? If having prophylactic language in your contract would’ve helped – write yourself a fresh new contract before the season ramps up next year.

Friday, October 2, 2009

OSHA and Residential Remodeling

Everyone in the remodeling industry knows that much of the work you do presents a risk of injury… and even death. And hopefully you know that all employers are required by OSHA to provide employees with a safe working environment. You may also know that there are 22 states (incl. Puerto Rico) that have state OSHA plans that you must follow (rather than federal) if you work in one of those states.

Did you know that each state has OSHA consultation services? This is different from OSHA’s enforcement division, which is administered by either the state or the federal government, depending on whether or not you’re in a state plan state. The Office of Consultation Services exists to educate employers and employees. They will perform site inspections by invitation only, and keep the results confidential. Small companies in high-risk industries (such as remodeling contractors) are given priority, and the service is provided for free. According to OSHA, “employers can find out about potential hazards at their worksites, improve their occupational safety and health management systems, and even qualify for a one-year exemption from routine OSHA inspections.”

On the other hand, the enforcement division makes unannounced inspections, and is the entity that will penalize you if you’re found in non-compliance. There are two types of inspections. One is a “focused” inspection, which looks at only a limited number of conditions for compliance, such as fall hazards, electric hazards, personal protection, and so on. The enforcement division may do this kind of inspection, but will also perform a “wall-to-wall,” which should be self-explanatory.

Many of you are paper contractors, so what is your obligation to comply with OSHA regulations? To quote: “You will be responsible for doing your best to ensure that your subcontractor complies with OSHA.” In other words, if your sub is not in compliance, and you can’t prove that you’ve taken all reasonable steps to make the sub comply (short of throwing him off the job), you will be held responsible.

This means that you will have to require the sub to
- Wear the appropriate protective gear (hard hat, eye protection, appropriate clothing, etc.);
- Use the appropriate fall protection equipment if any work is 6 feet off the ground or higher;
- Use ground fault circuit interrupters on each extension cord;
- Have at least one of his employees trained in first aid techniques, and;
- Have in place a written safety training program and hazard communication program.

If your sub is not in compliance, you should notify him in writing that he must comply before you will allow him to complete the job. Of course, if you employ your workers, it’ll be your obligation to have these practices in place yourself.

With that said, I have never heard of an OSHA inspection on a residential remodeling project in over 20 years of experience with projects around the country. But the issue is not about the low probability of being caught violating some annoying regulations. Nor is it an economic issue. The issue is ensuring that the people who work on your projects do not get injured or killed. This is a value set that should be a part of every remodeler’s culture. It’s about doing the right thing.