Should I Have Been More Trusting?

Grumpy

Fellow contractors and business people, I ask you an important question.

I recently contacted some general contractors in my area. One was eager to give me work because his usual roofers were so backed up they couldn't do service calls. He asked me to work for Time and Material (T&M). I agreed and we negotiated a price and so on. THis would be our first T&M customer.

I drafted an agreement basically writing down what we verbally agreed. I sent it to him and no response. I called him to let him know I can have a roofer do his 3 service calls tomorrow if he would fax back the agreement with his signature. He agreed.

He called me 5 minutes later and said "My boss doesn't like signing these things." I aksed why and never got any real answer. He began explaining that these service calls were petty and this wasn't needed. We would just send him a bill when the work was done. I said "That's great but I just need something binding."

I felt very suspicious and worried. I thought to myself "WHy are they so steadfast about NOT signing?" To make a long story short the conversation degraded into me suggesting we don't do any business together, wished him good luck and hung up.

Should I have been more trusting? I was worried we would waste a day or two of a roofers time and then get jipped on the bill.

Do any of you who work on T&M have written agreements? Should I have trusted this guy?

pgriz

Personally, I think your instincts were bang-on. No, being trusting is a fool's game, and I don't think you're a fool. Trust is earned, and if they wanted you to trust them, they would have signed the first repair, paid you as agreed, and then said, look, you've now worked with us, so let's do the next one without paperwork. Any time I have had a contractor that didn't want to sign it turned out to be a good thing that we insisted on a written agreement.

I'm dealing with such a situation right now, where a dealer of mine needs a work crew to install a roof. He can't seem to keep a steady team, so he turned to me to see if I would "loan" him one of my crews. Since I know why he can't keep a good crew (he cuts back on his agreed prices, and holds back on agreed work), I told him that I could help him out, but only if he first signs a one-page agreement (which covered the T&M aspects). We didn't hear from him for three days, which I assumed was used to try to find someone else to do the work that he asked us to do, and today he called up and said he'll sign, and can we start on Monday. Since I know many of the free-lance installers in his area, I got a call from some of them letting me know what he was asking them to do, and they all called to let me know that they turned him down (they have worked for him before).

Look it another way. Fixing up other people's crap is never easy and almost always takes more time and effort than originally planned. So if they don't want to sign a T&M agreement, they are telling you that they are trying to shift the problem to your shoulders. If you do only what they talked to you about, and it doesn't fix the problem, then it becomes your responsibility and your "lousy" workmanship. If you correct the problem by doing the things they didn't talk to you about, then they will say you don't work efficiently, so they won't pay you for the "overrun". You fixed the problem for them, but they got off cheap.

Nope, this is a type of customer you can do without.

Grumpy

Thanks Pgriz. In general I like to always have agreements of any kind in writing. So T&M agreements are common?

Floorwizard

I kinda have a similar situation, I got a call from an insurance company that wanted to start doing some work with us, but they felt "bothered" by having to go thru the paperwork to set up a charge account. They just wanted us to give materials to clients and bill them for it, and they would pay whenever I guess. The paperwork would have been 10 minutes worth of work, but thats not how they are set up at other places they said. Well I bet if I call those other places, there is a reson they want to do business with me instead of the usuall other places (not paying bills on time).
I try to avoid these people. There is no more handshake and we are done deals anymore.

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"in 20 years you will regret more what you did not do than what you did"

hatchet

"There is no more handshake and we are done deals anymore"

Florcraft - that really is a thing of the past isn't it? It's too bad that everyone has to be so paranoid now a days to cover their butt because some goof ball thinks he got screwed by the world and tries to make it up all in one shot. grrr

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Rich
WIT Construction Co.
Superior MT Contractor

pgriz

Actually, we do "handshake deals", but you have to know the people you are dealing with. As I said earlier, trust is earned. And that is more important than written paper. After all, if you have a written agreement for say $500 of work, and they don't pay, you can take send a lawyer after them or take them to court, but all these recovery mechanisms will cost you more than the $500 you're out. So most of the time you don't bother. You just make sure that no-one else does business with them again. There are some people who have earned the trust and they get $10,000 or more on credit. I have never lost any money on those who have "earned the trust". I have lost money on those with a written agreement.

That said, with all new customers it's always a written agreement. Partly its a way to ensure the communication is established and understood, and partly it's a test. If they get all shifty when you mention putting things in writing, they are sending you a very clear message that they don't intend to hold their end of the bargain.