Contract For Job 3 Mos. Out?

Buck25

Hi,

Do you guys sign contracts and get a DP for a job that won't start for 3 mos. and will only take about 2 weeks to complete? I don't care so much about the DP itself; I just want to make sure I lock in the job.

Or is that completely unprecedented and I should wait on the contract till I get closer to the date?

Just wondering what's kosher.

Thanks,
Dave

kycontractor

For me it would depend on how much material prices are fluctuating. I'd sure hate to get burned. I guess if you could go ahead and buy all of your materials now it wouldn't be a bad idea. No telling with this econ and president, studs are liable to be $100 a piece in a month. Just my 2 cents.

ProWallGuy

I'd lock it in now. I'd also have an escalation clause built into the contract.

__________________
Wallpaper Hanger St. Louis
Digital Murals Installation

Mr. Mike

Always be closing, I sign many up 3 months in advance with deposits.

__________________
Commercial Painter KY. Residential Painter Louisville Painting Photos Louisville

Buck25

Thanks for the advice.

Yeah, I'll definitely add a clause about the material prices going up. Don't want to lose this one. This is only my second year on my own, and this sale is 1/6 of last years receipts.

Dave

kevjob

before the bottom dropped out we would be booked for up to 6-8 months in advance, get the deposit lock them in and buy all materials now so no price increases.

__________________
Kevin
Basement Finishing Highlands Ranch Colorado
Littleton Colorado, Basement Remodeling
Kitchen Remodeling Denver

Century Man

Sign the contract and receive the deposit. This makes for a mutual committment from both parties.

rbsremodeling

Same here during the boom 6-12 months in advance would not be uncommon for us. Book it in and include a material escalation clause like it was suggested earlier

__________________

Carport King

We always take the sale with a minium deposit. Get the permit then before we start we get the rest of the deposit.

And of course we have price increase clauses.

I do a lot of condominium work which we sell in season when all the snow birds are here, but we do our work from May 1st to November15th.

The only bad things is that it's our hurricane season. Oh well$

Aggie67

Always. We set up work 9 months in advance some times. It's great, because our schedule board is easier to fill in when you know what's out there. There was a point this past spring when I had 9 months booked solid, every man in the company, and a point in September 07 when 75% of the crews were booked for the next 12 months. Now we're back to building up the schedule again (and it's slowly coming).

DavidC

Pretty much like everyone has already said. We get them on contract with a scheduling deposit, get a real DP when we start. Escalation clause is great. My supplier will bundle and store prepaid materials until I call for delivery free of charge. Requires a larger deposit from the HO of course.

Good Luck
Dave

__________________
www.CookContractingLLC.com

simplejack

If they are serious about you doing this project I'm surprised that they haven't given you a Contract to sign! When ever I've been awarded a Contract a few months out I get a Contract With the Handshake!

And a deposit process starts, But in this economy... they might be covering their asses for if a lender or someone falls out... If it's 1/6th of last years receipts I understand why you would want that deposit now! but I think you should play it cool and not suggest Anything Until you get a written Agreement that YOU will do the job...

I KNOW it's not the way it's normally done, but they might just hold off on the signing of the contract until a closer date IF they feel shaky about the project's future... Chasing them off until a closer date might give them time to find a more competitive bid.

All I'm saying is: Get a signed Contract FIRST without pushing for Deposit, it's not like you'll be out of pocket anyway until the job gets started. (assuming their are no materials that have a long lead time or that need to be secured, because in this case you Will need a deposit)...


Play it by EAR only you know how much you have on your plate a few months out, and only you know how much you really need this job...

(I'd say thats about 2 cents worth!)


GOOD LUCK!

Buck25

Thanks for the advice everyone.

I think I'll go for a partial deposit; not enough to freak out the client, but just enough to make her take the contract signing seriously. But I suppose I'll even play that by ear at our next meeting.

CT is a Godsend; being so new, I frequently have little questions like that pop up, where I need some mentoring.

Thanks again!

kycontractor

Don't want to high jack but, how much of an increase in material price do you guys eat before you use the escalation clause?

bwalley

Also to avoid issues with the client cancelling on you, start buying your material and lining up your subs.

Buck25

I think I'd eat about 5%. After that I'd use the clause, but I'd leave the markup where it was rather than increasing that proportionately to the increased material price.

Buck25

Here's my escalation clause:

Many building materials (e.g., lumber, steel, petroleum-based products, etc.) are commodities, and as such their prices can fluctuate. The Contractor reserves the right to modify the price of materials which fall under this category if, at the time of purchase, their prices have increased or decreased more than 5% from their price at the signing of this contract.

Dave

Mud Master

You guys don't have your suppliers lock in your prices??

When the economy hit hard, all my suppliers had created Project Purchase Agreements made up with us, stating that the price they quote us at bid time is the price we pay for delivery, even if the project is 6 months out and will take 18 months to complete, with bi-weekly/monthly deliveries.

My escalation clause only covers extra materials on change orders that were not part of the original proposal, along with a 15% mark up. Because i've never, in 13 business years, been told by my supplier that the price they quoted me was not good anymore. Every project I win/won, is based on the prices they quoted me, and they know that. Their not gonna turn around and change them after the fact. Up until around September, their prices were good for 12 months. After the market got so volitale and prices couldn't stay still more than a week, they came up with the PPA.

None of my local suppliers have thier purchase agreement online, but the one below is from a national supplier I buy from. Since I buy my studs for panelization by the truckload, it's cheaper to go straight to them. Cemco, Dietrick, GP, USG, Armstrong, Certainteed, National Gypsum, Telling and TSN all have these agreements, and they trickle down to the local suppliers, like Building Specialties(L&W,USG), REW, ProBuild, and some small locals none of you would have heard of.

Chances are your suppliers have these to, and if not, you may want to ask, why not?

Attached Files

CEMCO Purchase Agreement;WordDoc.doc (28.5 KB, 28 views)

__________________

Grumpy

I do it all the time in the winter, infact I count on it. I'm told my next price increase will be march 1st. I will eat that increase, but that's ok because it's nice to hit the floor running when the weather changes. I'm still pricing jobs on the current price list. I have several people on the schedule who have been waiting since November.

Brock

Had a garage signed and when contract went out 7/16 osb was 5 bucks a sheet. USA decides to bomb Iraq and start the war. Gov. bought every piece of osb and the price shot up overnight to $24 bucks per sheet. I got burned on the 60 sheets. This is why I have the material fluc. clause now and it is also one of the reasons I feel I am enitled to some of the bailout money.

Yes we charge for signature on all contracts and it is non refundable after 3 days of signing. No matter when we start.