Building and Construction - Re: What is progress payment? How are bids done?

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Re: What is progress payment? How are bids done?

sabinblack@gmail.com

2007-06-11, 5:25 pm

On Jun 11, 8:20 am, bam...@nospam.tnx wrote:
> On Fri, 08 Jun 2007 19:12:53 -0000, sabinbl...@gmail.com wrote:
>
> If you are just starting out ... you might as well get it right.
> Likely, you will be astounded by the hoops you have to go through.
> But, if you do not go through them, you will have no standing --
> if you ever end up trying to collect through the courts.
>
> The two best friends any small businessman has are his lawyer and
> his accountant. Get ones who specialize in small construction
> businesses.
>
> Yes, they seem expensive, especially starting out. But their good
> advice can save your butt many times over.
>
> Ken

Thank you all for you advice. I've learned a lot from your responses
and I will go out and do some research via books & getting advice from
the SBA + lawyers. Thanks.

Btw, what documents should I have handy when I send in a bid? After
reading the GC's contract, and if the contract doesn't specify certain
items, such as how long it takes for the GC to pay the subcontractor,
is it okay if I create an addendum and make them sign it? What do you
guys look for in contracts before sigining?

---Paul Cho

bambam@nospam.tnx

2007-06-11, 5:25 pm

On Mon, 11 Jun 2007 20:53:30 -0000, sabinblack@gmail.com wrote:

>Thank you all for you advice. I've learned a lot from your responses
>and I will go out and do some research via books & getting advice from
>the SBA + lawyers. Thanks.
>
>Btw, what documents should I have handy when I send in a bid? After
>reading the GC's contract, and if the contract doesn't specify certain
>items, such as how long it takes for the GC to pay the subcontractor,
>is it okay if I create an addendum and make them sign it? What do you
>guys look for in contracts before sigining?
>

You are addressing the right issues and asking the right questions.

Let's start with a contract. It requires seven elements:

1) Offer -- I offer to do the following work ....

2) Acceptance -- We accept your offer ...

3) Consideration -- No money needs to change hands, the exchange of
promises is the consideration.

4) Legal purpose -- obviously, the courts cannot enforce a contract
for an illegal purpose.

5) No duress.

6) Capable persons. Basically, sane and sober adults with the
apparent authority to cause the work to be done.

7) Capable of interpretation. The courts must be able to
interpret the contract within the four corners of the page.
For example, it is not enough for me to say I will you seven hundred
dollars to fix my roof. Fix what? How? With what? Fix it when?
How will we know when it is done? How is payment to be made, and
when?

This is why you'll need some legal help when you start out.... Not
only to ensure you are bulletproof ... but to ensure you understand
what is usual and what is unusual.

For example, I pay plumbers and electricians seventy percent on
rough in and the balance on completion. For drywallers, I supply
the board, but the tapers provide their own mud and bead. I supply
framing and finishing materials and pay on completion. If it is a
long job ... more than a couple of weeks, I'll pay a draw. It all
depends on what works -- for them and for me.

I'm small and flexible. Some of the larger contractors are
inflexible. Their way or the highway. Whatever you sign, or agree
to, make damn sure you understand it and that you have thought about
how it will work in practice.

You will find that most of the contractors you work for are serious
guys, who will watch for your welfare -- for the very selfish reason
that they want you available for the next job, and the one after that.

It is good that you are very conscious of cash flow ... I recently
backed out of a project because it meant I would have had to put up
a (for me) big chunk of dough for four or five months... and I wasn't
prepared to do that. I offered the owner a compromise, he declined,
and I moved on.

Most people are very fair minded and want to make the job comfortable
for you. Usually when people insist you take large risks, there is a
reason. It is good you are wary.

As to changing the contract, if you are not prepared to sign it as
is, I see no harm in asking whether a clause or condition can be re
written. If the answer is no, politely but firmly decline the job.

The only other advice I can give you is to lhang out with other
plumbing contractors ... unless it is a real cut throat market, most
will be happy to give you advice on what current practice is .....
especially if they can pass their overflow (pun intended) on to you.

Ken

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