Cost Plus, Included Vs. Excluded Language

bwalley

Whenever I have excluded items from a cost plus contract, it has cost me money and time.

On one recent job I excluded my contractors fee's on the Architect, I gave up $20,000 and with all of the time spent dealing with the Architect that I did not choose or hire, I have lost not only the $20,000 but also a bunch of my time and lost productivity.

griz

rselectric, you got it

It's really a pretty simple process

jhammer7

bwalley

Thanks for the input. That's precisely the type of thing that I'm looking for language to add to my contract. I have a good contract but I'm always looking to make it better.

I agree with the other posters about the appliances. When I mentioned "kitchen" I was referring to the cabinets and counter-tops to be more precise.

J

griz

jhammer7, One advantage of the cost plus is if the HO says they'll take it from here and do the, cabinets, counter top etc one answer to offer is who is going to install them?
Or if they are having that frame of mind at that point your done with them. You might have lost some profit & wages but you will need alot less bourbon and asprin.

rselectric1

Cabs and tops are items you need to mark up. You will have to deal with the door adjustments, missing or broken items, doing the final measure in some cases, questionable top seams, etc. You are well within your rights to expect PITA income for that.

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jhammer7

Griz,

I was hoping I might get something more positive from you with all of your experience.

Respectfully, I'll make certain presumptions from your profile and location. "Semi-retired" The construction climate is not what it was 10 yrs ago, not 5 yrs ago, not what it was last yr. While the lumber still grows on trees the projects don't and while we all have clients that once in a while that we would like to tell "find someone else", that doesn't pay the mortgage, heat the house, or feed the kids. ...."California..." Haven't been there but I'd hazard a guess that the average temp is not 20 degrees over the last month. I have subs and previous guys that are calling me every week looking for work. Telling a HO to "find someone else" might not be the best career move just now.

So since I have fired my last lawyer, I'm looking to proactively improve my existing contract so that I can make sure that I'm fairly compensated for my efforts.

Thanks to all

bwalley

My Cost Plus Contracts spell out a scope of work but not every little detail, and it says all work will be performed by my company or my subs and that the clients is not to hire any subs, provide any materials or do any work on the job until I am finished.

As in the job with the Architect, I specifically excluded that, yet I ended up dealing with him and being delayed by him, I shouldn't have excluded him, but I did, but this client is a very good client and is a friend of mine so I am not upset over it, I just learned a lesson that it is not a good idea to exclude work.

griz

Jhammer7,
I am semi retired because I choose to be that way. I have a small mortgage and other than utilities, taxes, & living expenses I have no bills. All my toys are paid for. It would be a matter of about two weeks & I would be non-retired and running the business on a 60 hr + week again. I'm stll working because I enjoy the work.
While many of my clients have remained as friends there are and always will be those that you can’t please no matter what you do. That was my point about “tell them to find someone else”. Especially if your on a T&M job & have gotten to a point where “they” want to take over. Some jobs just aren’t worth doing. You usually find this out about half way through.
As for California & you haven’t been here, lucky you. Nice to look at in places buy a challenging work environment to say the least. You are right about the temperatures, it’s not as cold here but keeping a loyal crew & good subs working is just as much an issue here as anywhere.
Keep working and fine tuning your contract, it does take time & each situation will be different, remain flexible. I believe you will be better off since you fired you lawyer.
Stick around here, read, comment and take some well intentioned ribbing now & then.

Cheers Griz

noahweb

I have a cost-plus contract I could share. Please PM ME

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jhammer7

PM ? What is that?

Brickie

PM=Private Message

I don't think you have enough posts to send PM's

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DaVinciRemodel

Neither of them do.

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katoman

I'm not sure about letting the HO do any finishes. What if they make a mess of it? When asked they will still say you did the job.

You need to consider your reputation on the job. I won't let the HO turn my work into some hack thing.

If they don't like it, I won't take on the job. Just another perspective to consider.

DaVinciRemodel

Here's a thread that may be of interest to you. It may make you rethink Cost+.


http://www.contractortalk.com/f16/gr...or-rate-71428/

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cexcavation

I think I understand what you are getting at. Correct me if I am wrong, but you aren't just talking about appliances. What you are saying is you lay all the groundwork and then they want to skim the resulting cream without paying you?

I have been in your situation where the property owner wants to save a little by "dealing directly" with subs. Problem is, the average homeowner has no idea how much communication, scheduling, set-up, etc. goes into allow a sub to show up, stay on budget, and get out. Inevitably, you will still end up doing all the work and not get paid.

I might be talking tough now and give in to the homeowner on site, but based on past experience I am saying package deal or no deal. The only things I will let the homeowner handle are the things that happen before or after me and do not relate to any of the work I am doing.

Example in point. I did a smaller public improvement project for a first time developer. He wanted to save some money by using my subs for concrete and asphalt, but not pay me my mark-up. I said OK and ended up regretting every minute of it. 30plus phone calls, extra trips to the site, disagreements over the quality of the subs work, price increases due to changes in the scope of work, etc. The stomach ache alone was worth more than my mark-up would have been.

My advice, break the project down into start to finish chunks. If there is a chunk that the homeowner wants to handle entirely themselves, then they can do so. If they get half-way through and decide they can't handle it, you get paid for the whole chunk to finish it. This takes the romance out of the idea that "Hey honey, we can just call the flooring guy in and have him finish up and save $200" Clauses and such get confusing, but segmenting the project clearly where you can make money gives you both the options you need to make or save money.

Just my opinion