Otterbeck, however, added to his contract as he learned from his experiences and now has a 17-page document. He includes a section explaining that clients will be charged on a time-and-materials basis for unforeseen problems. He also asks his customers to sign a release form from the cement subcontractor acknowledging possible damage to their property during delivery.
In his contract, Robert Vailes of Vailes Brothers lists what the company will do —and what it will not do. He also informs clients about additional costs. “I tell them there might be unknown variables and that they may want to have a $5,000 cushion for these things or to add to other features. If you tell them ahead of time, they are more receptive to changes,” the Fishersville, Va., contractor says.
Sullivan advises remodelers to have their contracts checked by a lawyer familiar with their state law. “Most states have individual laws that apply to building and remodeling. If you have a lawyer not versed in that, he could advise you improperly.” Sullivan also has an arbitration clause to avoid costly litigation in the event of a dispute. “If you have to take legal action or a client may take action against you, both parties have a right to submit the dispute to binding arbitration. I think this is fairer than going through the court system,” he says.
Payment Schedules Otterbeck spells out the client’s payment schedule in his contract, stating that the first payment is the deposit and that subsequent payments are at the completion of major portions of work. He asks for the final payment upon substantial completion. “That part causes issues with some homeowners. They think you’ll only finish half the job and walk away,” he says. “We explain that this is so items on back order will not hold up our payment. They usually accept our explanation, but sometimes we’ll just subtract that portion of the job from the final payment.”
Gervais uses layman’s terms, not legal jargon, to explain the payment schedule on his contract. “It says pay us X now, X when we start, X when we start drywall.” The contractor prefers the payments at the start of each step. “We’re sticklers for front-loading like this,” Gervais says. “It keeps us right on the cusp of being even or ahead of the game.”
Design In her work with contractors, Ittig has noticed problems during the end of the design phase when homeowners are often shocked that the final product is over budget. Because they have seen the higher-end project, they are unhappy with having to return to a more affordable version of their project. “Contractors try to qualify clients, but even people who are serious sometimes just get bogged down if the process, or their sense of what it should cost is off,” she explains. Ittig advises remodelers to carefully work within the client’s budget during design.
To help customers understand their design, Vailes creates perspective drawings in addition to the usual floor plans and elevations. “They are especially crucial for cabinetry, so the client can get a 3-D view,” Vailes says. He asks clients to initial all the plans and drawings. “On all the fixtures and products involved, we put together a package with the pictures and have the client initial these as well so there are no misunderstandings.” He recalls one kitchen project where the client requested drawer cabinets on both sides of the sink. When the client saw the cabinets, she said that was not what she asked for. Vailes showed her the design she had signed. “She eventually paid us $3,000 extra to change it, but if we had not had the signed copy, we would have eaten the cost.”
Pre-Construction Meetings To make sure he does not forget anything at his pre-construction meetings, Sullivan checks off items on a pre-construction form. “We review our policies and procedures line by line with our clients,” he says. The form also covers jobsite issues such as dumpster location, job signs, and work hours.
Vailes uses the pre-construction conference to introduce the lead carpenter to the homeowners and to cover all the details as a team. He requires anyone involved in the project to be present at this meeting. “Before the end of the meeting, the lead carpenter asks the client, ‘Is there any other work that you have discussed or were told that we would do for you that is not in the contract or on the additional work order?’ Those changes are written on an additional work order form that the client signs. This puts the lead carpenter, salesperson, and client on the same page,” Vailes says.
Photos Another protective measure used to document projects is taking before, during, and after photographs. Otterbeck equips his salespeople with digital cameras. His team views the photos on a split screen with their estimating program to reference the house and to create a thorough estimate. He also sends the photos to subcontractors at their request.