Customers With Endless Deep Pockets...

Mike Finley

Have you ever gotten one of those customers with seemingly endless deep pockets? I've got one now, and I have to admit they are making me a little bit nervous with how freely she is adding on.

My last customers was the same but not to this degree. It's not like a blank check, but it goes something like everytime we get together to go over something, something else gets added on. I saw this in a magazine, or at my friends house or... can we do that?

Since this started we originally discussed the budget, what they wanted I told them was in the 30K range, they wanted to be around 20K, now we are over 40K!

If nothing it is certainly a lesson to not get too caught up in what a client thinks something should cost or what they think they should be spending.

We are on change order #4 with about $12,000 in add ons so far. I find myself now trying to talk them out of things like it's my money they are spending.

I have to admit, it is getting me a little nervous. As goofy as it sounds I've caught myself questioning the motives, such as are they this free with the budget because they don't plan on ever having to actually pay for it?

skyhook

You never know, they could be worth millions and 20 or 50k is just a spit in the bucket. I would stay current on the progress payments and COs, as long as they pay, keep going.

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marc

In my world change orders are paid in full at the signing.

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Marc

Mike Finley

Project hasn't even started yet.

And Yes, skyhook, that is the one thing that makes me just take a deep breath. It's like climbing or repelling... the mantra you tell yourself is once you are 20 feet up in the air, it doesn't matter if you are 200. 20 or 200, they will both kill you just as much, so it comes down to do you trust your equipment? That's it. Do you trust your equipment? If so then carry on and don't worry about it.

That's what I do in these situations, do I trust my contracts and paperword and systems in place? If so, then just carry on and they will take care of me.

But it's still kind of freaky!

Geminijoe

Whis I was I that world...

Truth is I would be afraid..I dont do resi work so I dont find myself in that spot offten, with commercial work there is less of a chance of getting screw... (still a chance just less).

I had a project that i was talked into taking 2 years ago. 6000sqft extension on a house, (i took the job because the gc was also going to build the HO's new office/manufacturing building (the one I really wanted). turns out that the HO said to the GC "whoever is working on my house shall not work on my new building, its a conflict" so now I am stuck with just the house.

anyway, the wife starts adding/changing the scope everyday. all along trying to make everysub pay for it. we got a lot of CO's out of it and we gave away some stuff.... long story short as of today they still owe me 6k. all because she did not like the work the GC self performed. she even signed off on my portion of the work!!

yes we liened it, but what do they care. they are not selling or in any need of financing. so here I sit . thing that kills me is they can take the 6k and burn it. to them it would be just like me giving someone a quarter for a phone call...

I have got stuck on others but this one make me very .

Joe

KillerToiletSpider

Our company does mostly high end residential work in Co=ops and condos, the co-op I just finished had $67,000 in plumbing fixtures alone. I spent two days roughing in the shower valve for the master shower, two thermostatic valves, four control valves, four showerheads and six body sprays, on three different walls, the next day the owner comes in and asks how much it would be to turn all of it a hundred and eighty degrees so that the shower entrance is on the other side of the shower.

She didn't even flinch when the GC told her it would be an extra ten thousand dollars.

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A flush is better than a full house.

mdshunk

I have two notable customers with genuine deep pockets. Most of the time, however, when the customer seems not to care about prices, that means to me that they're going to give me trouble when it comes time for final payment. I know of one carpenter who had a customer get a bunch of work done, and filed bankruptcy on him. He never got any front money or progress payments from them, as was his usual custom with everyone. I don't know if he's changed his evil ways now or not. I know he got stuck for the price of a pretty nice 3-season porch.

dirt diggler

why be nervous???


you ARE getting installment payments, right?? (and for change orders as well)

with a very low final payment???

and they are paying ... the checks are clearing ... so what's wrong???




of course you're not fronting your own money ... right?

POOLMANinCT

finly,
your game is tight (litigiously&protocal)
you hit a jackpot......
enjoy it.....

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......Less with the jaw & More with the paw.....

mahlere

Teetorbilt

You haven't started yet? Fall back and regroup. Present an updated contract.

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You can't solve you're problems with the same level of thinking that created the problems.

Albert Einstein

KentWhitten

I've noticed, as many here prolly has too, that the richer folk have the attitude of "I didn't get rich by spending foolishly" so the mindset being "I want to get this as low as possible, then add stuff on"

I've had one that was like this and it turned out absolutely super for me. Tack it on baby!

Celtic

I have one like this now, also.

What started at 10k is now at 16k ...JUST electrical.

I'm running on thier money(at about 43% in advance)....if if dries up, call me when you break into the "rainy day" monies.

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WNYcarpenter

How'd you get the referral?

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"I knew I lost my wallet as soon as I threw my pants over the fence". -'lil jarhead bro when asking for a wire transfer...

ultimatetouch

honestly for somone with money...its only 12,000...thats not a tremendous amount of money these days. Most people would balk at it...the people who want what they want is who I really like.

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Ultimatetouch
Illinois Remodeling Company, Kitchen Remodeling Chicago, Room Additions Illinois

ultimatetouch

I like that Marc...its cleaner.. that way you keep right along with the progress payments with no confusion.

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Ultimatetouch
Illinois Remodeling Company, Kitchen Remodeling Chicago, Room Additions Illinois

Teetorbilt

Around here the papers are telling the public that the contractors should be able to take the $ hit up front.

No way that it's happening in MY business. I've been shafted too many times. Pay as you go seems reasonable to me. That way everybody tends to keep on the same page.

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You can't solve you're problems with the same level of thinking that created the problems.

Albert Einstein

Mike Finley

Got some info, this isn't real money they are playing with, it's pretend. It's all stocks in the stock market. So when it's time to spend more, it just means more stocks they have to cash out of. Seems they got into some really good investments so this is all free money to them.

Hope the market doesn't fall in the next month or so!

Tom Rohland

So what's the holdup????????

I suggest you take Teetors' advice:

Fallback and regroup. Present an updated contract.

Get it signed and sealed.

COLLECT THE DEPOSIT.

Break ground and DELIVER the goods.


Tom Rohland, Jr.
Ranger Painting & Pressure Cleaning, Inc.
Lake Mary, Florida

Giovanni

When we started working on no-budget jobs most of our customers were very successful business owners. In addition to the great advice from the other posters, there are three things I learned that really helped:

First, have your accounting system and paperwork in order so that you can track, bill and be paid for, and detail for the customer exactly where you and they are financially on the project at all times. Successful people are very familiar with financial statements and use them all the time to make big decisions. They can tear a balance sheet or P&L apart in seconds so they will be very quick to spot any discrepancies in your numbers. If you have 'splainin' to do when your numbers don't add up your creditability will suffer and from that point on every discussion with them about money will be like an IRS audit.

If your paperwork and numbers are in order the conversations will usually be about the project and not your accounting system. One thing that really helps with this is providing detailed Change Orders. Make sure they detail both the added cost and the added time. Lesson #2 was to include a section on the CO that lists the original price or estimate, the total of all COs to that point, the cost of the new CO and the new Total Cost. This is especially helpful when one spouse is spending the money and the other is earning it. Having them see those totals every time you present a CO will keep the worst of the 'discussions' about how much they are spending between the customers themselves and not about how you are charging waaay more than they thought.

We've had residential remodel projects with over 40 COs that have almost tripled the original budget and you don't want the husband looking back through his checkbook as he's getting ready to write you that final check and discovering for the first time how much he has spent.

Lesson #3 was to avoid projecting my tastes and values onto the customers. When they want the $150.00 TP holder instead of the $20.00 one from Home Depot that looks the same, realize that even if you would never buy the expensive one they see value in quality items that will last. The key is to work in their quality range so they feel confident that you 'get' what they are trying to do with the project overall.

I would never fly to Italy for the weekend just to find and buy an antique marble fireplace mantle but I've learned when our customers do, I need to get my head around it so I can relate to them on their level.

One final thought on projects with no budget: Burnout. Since the customers won't run out of money the project can turn into another Winchester House. While the money may be great, be on guard for your workers burning out on a job with no end in sight. Most construction people I've known (including me) like the fact that projects come to an end at some definable point. When this isn't the case they can subconsciously start feeling like its just another day at the factory. Their, and your energy, morale and productivity will begin to slip just about the time the customers are getting tired of living on a construction site. Then everybody’s cranky and things start to drag. That's not how you want the customers to remember your company.

If you can rotate crew members among other projects that will really help but if everyone is on this job you may have to make the call to end 'this phase' of the project so that both the customers and your crew can get a break for a month or two. The customers can live in their new home and your workers can recharge with a vacation or a new project that has a limited scope and timeline. When the customers have recovered and built up their wish list you can hit it again refreshed and ready to go.

Giovanni