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.

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