This MISTAKE Nearly Put me OUT of Business
HTML-код
- Опубликовано: 26 сен 2024
- Schedule a BUILDERTREND demo with code “Risinger60” for a 60 day money-back guarantee! get.buildertren...
Matt has been building for 24 years but this critical mistake when he started his business 14 years ago nearly caused his demise. Matt has some sage advice for new and old builders alike in this episode of The Build Show!
Elements of Building Book I mention in the video.
amzn.to/2PFIMpX
/ risingerbuild
/ thebuildshow
Huge thanks to our Show sponsors Polywall, Huber, Dorken Delta, Prosoco, Rockwool & Viewrail for helping to make these videos possible! These are all trusted companies that Matt has worked with for years and trusts their products in the homes he builds. We would highly encourage you to check out their websites for more info.
www.Poly-Wall.com
www.Dorken.com
www.Huberwood.com
www.Prosoco.com
www.Viewrail.com
www.Rockwool.com
I too have been burned by the "tost of the Kyle". Great video! Loved the overlay with the gantt chart/project schedule.
tost of the Kyle will get you every time.
Kyle Toth reference❓
ruclips.net/user/HomedepotKt
what's a tost? who's kyle?
So I'm not the only one that caught that...
Kyle was an unreliable crew member, so I tost him. 'Tost of the Kyle' actually worked to my benefit.
Your best content yet. More on running a job vs quality of job
I've had a contractor that was going to break even after he underestimated the time & labor and he let me know as we talked daily. I told him that I would take care of him and we did. He still helps us out from time to time and we consider him a family friend at this point. Contractors should not be looking to rake a client over and clients should reciprocate especially when the contractor is a small fish in the giant ocean.
Good people like you are not as plentiful as we hope. That's a very honorable decision you made.
As a contractor I can promise their are almost as many bad customers as there are bad contractors. If you have a change order get it taken care of before you do the work. They always back out after it’s done.
6:37 I always find it funny when I do this. "Tost of the Cile". I'm glad it's not just me.
Can I ask what that means I've never heard it
lol I thought that’s what I heard him say.
Kirk, He’s saying “Cost of the tile”
My dad spoke like that intentional a lot when I was young. Messed me up lor fife.
I do this all the time. Source: my loving wife :)
I'm a HVAC contractor and I don't deal with change orders often but let me tell you I'm changing my contract clause after watching this. Thank you
This applies 100% to the DESIGN side of building too. Detail your contracts and scope of work docs out to the nines, then be clear and quick on communicating changes. Thanks for making this!
Yes, I was going to write that as well. Design professionals need to get more adept at invoicing for changes, rather than absorbing them.
I have an almost identical story in the cabinet making industry with my first high dollar client. I did about 100 linear ft of custom cabinets made out of maple and walnut. Raised panels. All the bells and whistles... I wanted to be the good guy and I did way too many "favors." My always saying "yes" gave me an impossible task, and I didnt want to upset the client so i worked 18 hour days and spent every dime i had and then some to try to make the client happy... In the end i lost money and the client hated me, and I'm not so fond of them either. I trusted them and didnt get anything in writing. It went bad... And it was because i was inexperienced in documenting our agreement of what I am being hired for, what they are paying for, what they are NOT paying for, and I was afraid to stop them and let them know up front that any changes would cost extra
As a software developer consultant, this video really rang true with me. We run into this in software projects all the time, and our industry is so young still. Lots to be learned by watching other industries, especially stuff like this video. Thanks for making it.
Sooooo true.
Just to add my 2 cents:
If you don’t charge your client, even for small changes, they will think that you have a big (enough) margin so you can eat those changes.
If you charge them fairly but for everything not within the budget, you’ll give them the impression that you’ve calculated your price with great precision and that you’ve got your things in order.
They will not love you for change orders but they will understand. And if even remotely possible, I think you should give the customer the choice whether or not to take it.
They rather choose themselves than have an extra cost forced upon them. Even if it’s a ‘no brainer’. It’s their money so let them decide.
The BEST part of this is that I work in IT, and this actually is relevant within other industries as well, NOT just within the 'building' community.
Josh, I also work in the IT field and agree with you. When I train new employees we spend a lot of time talking about "managing expectations" with the customer. Especially when it comes to tier1-1.5 support.
Getting properly compensated for you work is universal. I tell people that the most expensive word in building is "just". When customers want to change what they are going to get, they have to realize that that changes the final invoice.
Same here also. IT business owner and same issue, great video.
Project Management, Change Requests (CRs) , Enhancements , Bugs. That’s what you hear all the time.
IT guy here too! Same situation here too...some clients change everything into a new project
Early in my business endeavors I had a fellow businessman tell me the best advise I ever received for my business. It was so simple. "Profit is not a dirty word." At the time my naive response was "I know," but I really didn't fully grasp what he was saying. It wasn't until YEARS later when I had finally gotten my business in a consistent, profitable position that I finally truly understood what he meant.
Fair and competitive pricing IS necessary, but you must be profitable to allow growth in your company. You can stay home and make nothing, and that's a better option than taking a job that is going to lose money. Thorough, complete, and concise estimating; good execution; good customer communication, including the need and reason for change orders; good, specific, and complete contracts; and proper application of markup = a good business that should be profitable.
No matter what your customers tell you or make you think, PROFIT IS NOT A DIRTY WORD!
Totally. Yes
A lot of guys can do the work but managing the work is a whole different beast. These kinds of videos are incredibly valuable.
Well said sir! I am learning the hard way as my business grows.
Russell Nentwich - One lesson I had to learn the hard way was always start with a higher estimate because then you have room to back off of it a bit. If you start too low the customer is never happy when the price has to go up. Also be cautious about who you give itemized bids to. I usually only do them on insurance claims. I have had customers trying to make me use drywall screws (they provided) to put backer board down because they are trying to save a couple dollars and noticed the screws I bought were expensive. The last guy I did an itemized bid for (I don’t know why I even gave him one) he spent 3 weeks going back and forth trying to get the price down by eliminating things that I finally told him I was too busy and couldn’t do his project. The final straw was when he said he could save money by doing the electrical himself if I could show him how to do it. Know when to walk away. Customers who start like that, finish like that. Set the price you can comfortably do the job for and don’t let them monkey with it. Most times when I walk away because I am not renegotiating a perfectly good bid they call me back to do the job. Then you have the guys who’s brother looked at your bid and can do it for $50 cheaper. People like that have lots of friends just like themselves they will refer to you. Never do an at cost job for the little old church lady because she has 5000 friends who need a favor too and they will blow your phone up. I have heard customers in the other room bragging to their friends on the phone how they “got one over” on the contractor working on their house who was me. I also used to hear them cry because they are on a fixed income. I tell them I am on a fixed income too and it’s so bad my wife can’t even afford to keep me at home anymore. I did thousands of people favors but none of them showed up for any of my surgeries to help me out. There isn’t enough left of me to keep doing that.
I just had a post in my Facebook memories today from a few years ago when I was still pretty new in business. "When you open a business you receive two bags. One is full of luck, the second one is empty. The trick is to fill the second bag with experience before the first one runs out". I'm 30 and have been in business for 5 years now. It's been a rough ass road, but I dont think I could ever go back working for someone else. I'm here now. I'm staying til the end, what ever the end may be.
Keep it up! Pray and ask for Gods help. Be honest and give your best to every job. Those are becoming more rare and you will stand out
Couldn't agree with you more
That’s a great saying about the bags I’m going to have to remember it I started my business when I was about 30. 25 years later now and we have my 26 year old son working with us. Yeah you can stick it out .You never risk more than you’re willing to lose. Always try to keep customer service number 1, 2 and 3 of the rulebook. As well as filling the 2nd bag with experience, was true in my case and I still haven’t emptied the first bag.
From the prospective of being a possible client of a builder, the broad definition of reasons for a change order means the builder is virtually protected from any cost overrun. Is the builder properly supervising his workers? Is he and his subcontractors knowledgeable about code requirements? What is the guarantee that the builder offers? Are there independent inspections of the building during various stages of construction that must be passed? Some builders have special 'relationships' with code inspectors who may let some code violations slide. Builders have many subcontractors any one of whom, can place a mechanics lien on a property if there is a dispute between the builder and the subcontractor. At the end of the day it comes down to having integrity for the client and the builder. I do think builders need some skin in the game or they might not be as responsible as they should be. Independent inspection would go a long way toward making the client feel they were getting the quality they are paying for.
Bidding and estimate process Matt. That would be a nice video also. How to set a budget
I could not agree more that would absolutely be good.
I've been doing repairs and remodels (mostly) in rural New England for 15 years and I dont know if it's just my area but the culture won't bear signed contracts etc... I know a lot of local builders and the "handshake" contracts are so ingrained that trying to get a signature will likely cost you the bid out of suspicion. I see all these guys on RUclips talking about charging for estimates and getting signatures and like here, change orders.... When run into something unexpected or the customer changes something, I just say: "that's going to cost 'x amount' more" and they say OK or nevermind.
We would also do a zero cost change order just to update details and show value on the project.
I agree. In Australia, we call "Change Orders" "Variations". You can change a profitable project into an unprofitable project by mismanaging the variations and you can change an unprofitable project into a profitable project by managing well variations.
Regards,
Geoff. Reeks
Builder
This hits a lot of us, it did me. Thanks for sharing! Very important information.
Tom Im me too
Not to exceed or maximums...being a people pleaser...man those rough client jobs will make you rethink your approach...thanks Matt for being so honest with important information that contractors need to know
Matt I run into these types of issues all the time. My problem is that I usually under bid the change order and I don't think of the extra time it takes. This has killed me on many big jobs. Thank you for the advice!
Thanks for this informative video. I think a great follow-up would be one from the customer perspective on how to properly budget for a large construction/reno project to reduce the shock and anxiety of budget and scope creep as the project inches along.
Unless you're a very experienced client, expect a 20% contingency above your "whoa" price. If you are completely clueless, add 100%.
@@ArthurDentZaphodBeeb Or maybe the contractor could do their job and come up with an accurate estimate of cost. You're the experts, right? One thing that bothers me about so many of the comments here is the disrespect so many of you in the building profession have for your clients (you know... the people who are PAYING you and keeping you employed).
Great advice Matt, good of you to throw that out there as those type of issues can wreck a business quickly.
Honestly, these are the kind of "Sage advice" kind of videos that I value most and end up coming back to view later.
Excellent definition and overview of change orders. Thanks, Matt!
I'm a client and not a builder. I can honestly say that I would've welcomed our builder to use change orders to document the financial changes to our budget. In fact, I would've appreciated it if he would've kept track of the costs on something other than the back of an envelope. We contracted a cost-plus house project. At each point where we were faced with a required or optional modification, we diligently asked, "What was the allowance?" or "What was budgeted for that?. At almost every point, we would choose the less costly option. And we'd record that in our own spreadsheet. Imagine our surprise when the builder said at the end, "Just authorize this last draw to transfer the remaining bank funds." Whoa. What about the accounting of our budget vs. cost? What about our elimination of several items from the budget? What about our direct payment of material that occurred? What about the return of the tile? He couldn't answer our questions because he didn't keep close track of the cost expenditures as they occurred.
This was the second custom home that we had built and if I did a third (which I won't...), I would recommend finding a builder that is savvy on not just the building quality and workmanship but also look at his or her financial skills. As Matt said, his relationship with the client was damaged. And I regret that with our builder, the project ended on a less-than-cordial parting. I would've been so enormously happy if we would've used an online financial tracking system and could've presented us with documentation over the lifetime of the project. In hindsight, we needed a contractor like Matt. Live and learn.
"Change Orders" are a builders best friend. I've worked for only 2 builders that were masters of the change order. The other 50 never quite figured it out.
JohnnyBDyer no bs, these can really kill you, , Cheers from NJ
I loved your “tost to cile” comment. Really though your an amazing teacher and a wealth of knowledge, thank you so much for putting yourself out there like you do! I’ve learned so much as a homeowner from you! I’m not a builder or even in construction. I’ll keep watching and learning!
Thanks Matt, great advice on change orders. I am an engineer and this video is applicable to our whole industry with respect to management of a project. Looking forward to seeing your next video.
I'm an automation contractor and find this advice very useful as well.
Great advice In addition to making sure you pick up change orders when they first come up, make sure your contract scope is as detailed as possible before you even start work since this is drives what is and is not a change order. Make sure to list not only what you are including in your scope but what things you are excluding as well and expect to be done by others. Also make sure that the contract references whatever version of the plans you built your estimate off of because you could find yourself on the hook for additional work if revised plans come out at a later point.
From a client perspective (me), this is the best comment thus far.
I really liked this video. As a carpenter who is currently in the process of starting my own building company this is great information. Thanks Matt 👍
I went way overboard to Help a family after a disaster. They felt cheated by the Insurance company and didn't pay. In court Judge asked why? She stated "I didn't feel like it". I do spec only now. More videos like this please. Thanks
As an estimator, I was constantly reminding the PMs that they were making changes to the project without creating change orders and getting them approved. Next thing you know, we are over budget and the Owner doesn't think he is responsible.
Change Orders ARE important!!!
Chris Boyd would love to get your insight and expertise on best way to estimate as I am getting ready to launch a design build company and am looking for time saving / accurate estimating processes
Sir, I am grateful for the advise, making mistakes is acceptable with due diligence, but, helping people not to make the same mistakes, is priceless,
Excellent advice, Matt! This is a must view for any builder, architect, or client.
Thnx for covering contractural issues, like Change Orders. I’m an architect who owns a small design/build firm. The architecture & the construction come easy - running the business is the hard part. Good thing u mentioned the impact on schedule. Most Change Orders add time as well as $ to a contract. Clients need to know that in order to manage their expectations. I’ve had some jobs where the total value of all the Change Orders is higher than the original value of the contract. But more importantly, that can add months onto a job affecting other projects waiting in the pipeline. Once I lost a job because I had to push back a start date due to Change Orders on a current job. That was painful. I tell all my clients, the 5 most expensive words in any project are: While We Are At It. Clients changing their minds represent Change Orders for us. I think my record is 27 on one job.
Never been a fan of cost-plus with a guaranteed maximum. There's an advantage to the customer, with no advantage to the builder. The only way I would want to do this arrangement, would also be by adding a guaranteed cost-savings clause, which allows the builder to share in any savings over the original budget.
hI Matt been in this game nearly 40 years and this video really hit a nerve,it was a good and honest presentation and bang on point, iv done the very same thing countless times trying to be a people pleaser, its not worth it if you have to lose out...buisness is buisnesss at the end of the day and if your a genuine and honest guy your clients should trust in that and be willing to swallow the extra burden to their budget....after all its for them right!....great video
Under promise and over deliver is a good philsophy.
Matt. This comment is old, but this vijayo just showed up in my RUclips. I've been watching you for a couple of years. This is the first time I've seen you stop schlepping product, like Bob Villa, and actually talk to contractors. Please keep it up. I'm not a rookie, I'm older than you, but we all need these reminders of what it takes to wear the pants in a real home builder/remodeler environment. As an encouragement, please follow up with how you handle allawances. If you are at a loss, I would be happy to help.
Thanks for the video. Just starting the process of building a house on Mayne Island BC.
EXCELLENT advice. Ive been doing construction management, and now 5 year business owner, for well over 20 years. This advice is spot on. I have made the exact same mistakes. Not at that level of loss, but loss nonetheless. As you said, in our efforts to please the clients, which is important, we can actually ruin relationships by delaying the importance of communicating changes.
Holy shit. Great advice! Exactly what is happening to me right now. Wish I saw this sooner😥
Really appreciate hearing about the business side of your vocation & not only the trade side. I was a successful contractor in CA for 20 years & love talking about how to run a business, but rarely do I hear business owners sharing or even having wisdom from their experience. Good job & thanks for sharing the upload.
I really enjoy your videos Matt! Congrats on all your success. I am contemplating building in central Houston and your experiences and suggestions are invaluable!
Appreciate your candor and willingness to make the industry better.
One change order trigger really surprised me "...when a government agency requires something meaning your inspector says..." Maybe I'm misunderstanding the type of thing you are talking about but isn't that exactly why you pay more for licensed contractors, to (hopefully) get somebody who's going to know all the requirements and price those into the job? I know I would assume the original contract price would include doing everything up to code in accordance with all local laws and regulations. If an inspector is requiring a change, I assume it's because it wasn't done right the first time and the contractor should be on the hook for that not the homeowner. Unless there was a prior change order where the homeowner said not to do it to code, which I also assume a reputable contractor would refuse to do in the first place. I know we homeowners don't always understand the full costs of our decisions and see how change orders can be helpful in keeping us informed and aware even if it means going over budget. But I'm going to get pretty upset if you tell me it's going to cost more to build to code good enough to satisfy an inspector when I thought that's what I was paying for from the beginning.
It's not always that simple. Codes change, and interpretations of codes change, and contractors don't exactly get a notice ahead of time. He is taking about things like new efficiency requirements, or like when they started requiring AFCI circuits. It's not uncommon for us contractors to find that out in the middle of a job. Now this isn't always when the inspector shows up, but can easily happen between the bid and build
Right. Donald has a point about the contractor should know the code, but Inspectors vary hugely. You don't always know what their interpretations are going to be. This risk is shared by the homeowner. @@charleyandsarah
Donald Shockley I agree. Doing a kitchen remodel as the owner and I pulled the owner-builder permits. The electrician, carpenter, and plumber didn't bother to read the specs of the appliances I had bought months before nor ask me for the model numbers before they quoted. Guess what, code says 600 CFM+ range hoods require makeup air venting to be up to code in the US. Sub zero fridges have very specific and out of the ordinary locations for ice maker lines and the Outlet. I provided an extremely detailed floor plan and scope of work, but every trade missed the nuances of the particular appliances I bought. The devil is in the details, and as the one cutting the checks I expect you the tradespeople to be the ones to take the time to catch these details up front and advise me of the details either by doing it right at no greater expense to either of us, I.e. pulling the pex or electrical to the right locations required by the fridge, or informing me that I need to budget for makeup air venting due to code. I had to watch this channel to learn about the makeup air thing because my local inspector had no clue. But as the homeowner I care about the code because I care about the safety of my family, so I always pull permits for both DIY and owner-builder subbing out I have done on my house. You guys are the pros, I shouldn’t have to spend nights watching RUclips to keep on top of the licensed contractors I hire to do work. For every Matt out there, I estimate there are 15 clown/contractors that think they know what they are doing and put the “fat” in their estimates to cover their ass in case they have a smart client, or worse, they hope for ignorant ones and pocket the fat and do crappy work. It's got to be a win-win.
@@An_Urban_monk Glad to see other customers on here. This is exactly right.
@@charleyandsarah Sorry but I agree with Donald Shockley, it's the contractors responsibility to follow all local building codes within the jurisdiction he's doing business in.. It is the contractor that's pulling the permit, so if there are any questions regarding local building codes, that would be the time for the contractor to address them at the building dept. prior to a finalized quote...Nothing should change (within a reasonable amount of time) once the permit has been issued.
Upfront conversation can often offset future problems. I go into as much detail at the beginning of the process and I find that helps with unseen situations that will arise
Thanks for the upload
We are very much alike
I always try to please my clients at my expense
And it pains to charge extra but over the years Ive gained experienced and learned to adjust the price and thank God and this is an understatement
I've developed a solid base meaning my clients always call me back and the reference they give to other is solid so that I dont need to go through process of trust as hard
as I used too
I also choose my clients
Thanks
You're an inspiration for me
Great video! Oh so true. Let's face it....whoever has built on budget? I'm a finance and accounting guy who's dad was a home builder and additionally raised in the corporate construction industry. Even on my house after I had detailed all the costs even including the porta-potie, insurance and so forth, I was still over by over 9%. Everyone should look and listen carefully this video! BTW-If I was building in Austin (I live in Houston), Matt is the ONLY person I would have building my home!
manage expectation, this applies to every industry, great tips.
Thank you you hit my project right on the head not only time but money Really appreciate your Input
Matt, have you seen the pictures of the motor yacht called "Change Order", with a dinghy called "Original Contract".
Hilarious, unless you as the contractor are in the corner you just described.
John, have a peek here for most of the story -
constructionmarketingideas.blogspot.com/2009/03/change-order-boat-mystery-partially.html
constructionmarketingideas.blogspot.com/2009/04/real-change-order-boats.html
Nice....
Thanks for adding this video Matt. As a future client for buildings to be constructed it not only gives me a view into what to expect from the builder but also additional questions to ask prospective construction partners.
Good show on setting boundaries, project management
Hi Matt, as a remodeler, I really appreciate the straight talk about how to avoid mistakes like this that can cost you not only money but reputation in the marketplace. Thanks for the tip.
Bidding and estimating process would be a good one to talk about
It's not a talk, it's worth an entire channel. Costing work is an art, not a science and is something that takes years of detailed costing to properly do.
Outstanding video! As an architect, I face similar issues with clients not understanding that changes cost money. If I don't get them to sign off on schematic plans and train them that changes beyond that point will cost them, then I've already lost money on the job. Keep up the great work educating the public!
Very valuable information! I slack on doing change orders, definitely need to step my game up
Great video!
Agreed about the change orders. When we do changes in the field, before starting we get a Change Order Directive, which can be a short hand written note that the owner agrees a change order is comming.
Tost of Cile!! :) Great video watch them all the time
😆
The tost of the cile gets me every time
I was searching for someone's comment about this 🤣
@@306Tripsy lol so was I
Hey Matt thanks for the video, I've been building for 20 yrs and the very same thing happened to me. Now I cover every avenue and most people don't understand, but this is our livelihood. Keep the videos coming.
Can we see more of that house.
I feel like this channels has changed from “hey here’s a cool product and/or proper way to do things” to straight up continuing education. Fantastic advice coming out!
I'd like to know pain points that you encounter from plans...what can I provide as the Designer to alleviate construction and contractor related problems, enhance quality and tightness of the building, while designing affordable, etc. Is a generic nominal approach easier for you to work from, or is a dimensionally accurate set better for you??
This is the kind of info no one else is giving. Thanks for everything.
"Tost of the cile" at 6:40. lol
Really appreciate you sharing your process, and experiences. For a young builder these are huge! Bless you and your family. Keep up the great work. Ran into your stuff last night and have been binge watching for the last 10 hours
I would like to hear more about your estimating process, and how you deal with potential new clients that are only shopping price.
-Jake
Price “only” Shoppers are loss/loss Jobs.
I'm a remodel estimator and we do rolling cost analysis on each project so we have reliable numbers to use for bidding. This allows us to get close with our 'preliminary' estimate without putting too many hours into it. I imagine you could invest some time in analyzing your costs over a few jobs and come up with similarly 'close' pricing that applies to your style of construction. Also, faulting potential clients for shopping around isn't really reasonable. Would you buy a new truck without checking comparable prices at a few dealers? For most people, home construction or remodeling are the biggest checks they will ever write in their lives; as their builder you should respect that and encourage their due diligence.
Anonymous Person what’s your company name? I’d like to look you up.
Anonymous?
I'm a custom cabinet maker. Different but similar business. I am a 1 man shop specializing in one of a kind pieces. I think there is a lot more to the puzzle than the simple question of "how do i deal with price only shoppers?". Some people make a great living dealing with price only shoppers... Look at Walmart. Look at Home Depot and Ikea for their cabinetry and furniture. So... If thats your business model then thats fine. But its a tough one. Difficult to compete against those guys.
My personal philosophy is that "price only" shoppers will never be for me. They arent bad clients... They just arent my clients... So how do I make lemonade from lemons? In my experience a successful client pitch takes 3 things. Trust, impression, and price. If any 1 of those 3 arent achieved then I usually wont get the job. They have to trust my character. They must be impressed with my skill and business, and they have to be able to afford me. The first 2 are most important. It's OK if they cant afford me. Because if They are impressed with me and trust me they will at least talk about me and recommend me to someone else who may potentially be able to afford me. Also, its possible they can't afford me for this particular job, but something down the road they might be able to, and if they are impressed and trust me they will come back when they know they want something nice even tho its expensive.
But to do business this way you need to succeed at being top notch in your craft, and your reliability. You need to always under promise and over deliver. Give your clients beautiful products and even throw in something extra and special for them. If your client is a cop, throw in a hand crafted cutting board with a blue line in it. Something like that. Always be on time and make it a relief for your clients when they call you. They can know you will only hurt their bank account, but in every other way you are the hero.
Boy y’all just wait till next recession to hit. These oh I won’t take this client yeah sure. When you don’t have any business you’ll be clammering for clients
Thank you Matt for putting this out! This the most important video I have ever seen and I say that from experience. I had that happen to me and I managed to brake even but I closed my business. I also had a friend go through it to but did far worse he lost everything so thanks again.
You seem big on Builder Trend, Maybe do a tutorial on that. I have seen it in the field.
Excellent video. I'd love to know more about how you structure your contracts (cost +. fixed, etc.) and how detailed are the specifications you include in the contract. Also it would be cool to know how you contract with subcontractors and deal with issues like insurance and scopes of work.
Lots of good questions there. Let me add this to my list of videos ideas
We had a small cabeing co and the foreman were supposed to have a plain old 3 part speedletter which the customer could sign on the spot not as detailed but did establish that someone had authorized the add on. Another thing that was supposed to happen was that the foreman was to make a daily record of what was done that day sometimes only a couple of sentences but those "field notes" could stand up in court for a job that totally went south. My landlord owned a big underground construction business and he claimed they won a million plus settlement due to field notes and change orders.
I’ve been building for 25 years as well. Love your attitude. Very inspiring.
This is a great video! I agree and disagree on a few points:
I am a retired G.C. , worked for 21 years in the westside L.A. , I have never done any type of advertising, all my clients came from word to mouth and real estate agents . 100% of my contracts had a written guarantee of no change orders, no extra costs, and I never charged an extra dime to any of my clients. City inspectors did, sometimes, required more work, as a pro, I should know that and could not charge my client... on remodels, as a pro, I always assumed studs around showers and other wet areas should be replaced, we are the pros and we should know the rules of inspections, the rules of building, and charging a client for those things are, to me, a simple and easy rip off, no wonder people are "scared of G.Cs."
There is too much abuse from our colleagues... on those hateful "change orders"...
However, there is nothing wrong in selling an extra feature, different tile or floor or windows or whatever and charge maybe a little more to cover some losses in the fixed contract... to your client, the: Hey, since we have to demolish this unplanned whatever, why don't we upgrade it to whatever... he will thank you for it, then you can charge, and can get a contract timing extension...
Yes, I lost serious money on a few jobs, but my reputation was excellent on the famous "job done within budgeted contract !!!
Love that you are sharing your hits for our benefit. Thanks Matt
@6:41
I've never encountered the "Tost of the Kyle"
Could you elaborate?
LOL...
Just ribbing ya, man... Love your show... Very informative.
I was like, wait a minute did I hear that right.
Put the captions (toggle that CCButton) on and you clearly see in the subtitling "toss of the Kyle" which is Texan for "cost of the tile".
@@Don.Challenger Yeah, but how far do you have to throw him, to get a good price?
Well, I suppose if you got some (though in rurally parts of Texas just a ditch - if that) to the curb. Toss Kyle to the curb and he ought to come back with a better/sharper price on just about anything.
As a trim subcontractor, it would be great to here more about your processes on how you interact with your trim subs. How do you go about getting a price from the sub before the job starts? Do you provide a detailed scope of work? Does the trim sub do a trim walk through with you and the client before trim gets ordered? How do you manage any changes after the scope of work has started? Do you find that your subs assimilate to the builder trend system well? What are your pain points as a builder with a trim sub? What can a sub do better to stand apart and be the best sub?
Tons of good questions. Might make a good podcast episode! Most trim contractors work on my jobs at a T&M rate.
Matt,
Great video.
I agree with how important it is to keep up with our paper work and signed change orders before we do the work.
Did he just say: "the tost of kile"? Lol. Good video, very professional.
Man, I learned this the hard way as well. Thanks for sharing Matt.
Thanks Eric!
*Great... Now tell us as a Homeowner How to Avoid Change Orders! What to do upfront and determine "allowances".*
Liberty Smith - Here is how to avoid change orders:
DECIDE what you want before the job starts.
BE SPECIFIC about exactly what the job is to include.
DON'T change your mind and ask for something different after you have agreed on price and signed contract.
If you don't change the job (even a small change can often have impacts that you are unaware of because you are not a builder), any other "changes" ( differing underlying conditions, inspection issues, etc.) should be on the builder if he did a proper estimate, did his homework and checked your job out carefully.
The big caveat: If you always take the low bid, expect that that guy did not do a proper estimate, did not do his homework and did not check out the job carefully. Guys that are pros have your job covered when they do their estimate and scope out the job.
Get 3 or more bids - take the either the high bid or one of the middle bids.
How to avoid changes on a home build? Keep your wife off the site. LOL
Thank you so much Matt.
Thanks for sharing your these painful but really important learning experiences.
So have you ever gone back to that client and thanked them for the lesson their project taught you?
Personally I would not go back and "thank" the client for losing money on his job. There is no way that this admission will help you going forward.
As a homeowner it’d be great to hear more about this. At the very least I can see what good builders do vs paying for projects as I go thru life and learning the hard way.
I’m Not a builder but your comments really ties into my business as well thanks very much.
It takes one of these experiences to make sure it never happens again. My very first day in the business, my PM said to me " Dont ever do anything for free, it wont be appreciated, it will cost you money and the relationship in the long run." That was in 1998. We were fishing together a month ago and I told him that I tell that story to a lot of people over the years. He said, "so what are you doing today, learn anything?" I said no, I'm still doing things for free. His response, "me too". We are both pleasers, but you hit the nail on the head. EXPECTATIONS UP FRONT. You can be a pleaser without losing money, and the relationship between you and the client will remain strong. This happend to me as well, but I was lucky the client wrote me a check prior to closing. Have you done any videos on Cost Plus vs Straight price contracts? I prefer cost plus, and I do open book budget presentations prior to start, including bids if questioned. I sell trust and wanted to carry that through to final budget, but I will not start a home until all the numbers are finaled, no exceptions. Thoughts?
Thank You for your great insight! Would be possible to do a video series from start to completion of a project if your client is cool with it? It doesn't have to be a tv show kind of a thing. Like starting when a client approaches you for a project or bidding for a project, cost estimation, contract negotiation, tracking progress, solving problems that come up (what does that meeting/ consultation look like), change orders, talk to workers from time to time as to what they are working on, etc... It does not have to be a regular program. Just following a project from start to finish. A thought.
I have thought about that and I’ve got a Build in the Fall that might be a good fit!
Great advice Matt!
Like someone else said, this is an aspect of construction nobody really talks about except Stanley Genedek.
GETTING CUSTOMERS TO PAY CAN BE A REAL PITA (even satisfied customers).
I can affirm in my Roofing business, you must start with a solid contract and get customers used to paying for things as the process moves ahead. ALL add ons must be documented, signed approval by the customer and finances must be secured. Especially on insurance work. People get a fat check from the insurance company and get squirrely. Again, thanks for bringing this to light and keep up the good work. I love your content.
Appreciate that. Agreed
Thanks for your honesty Matt. This again shows how valuable your advice is, and we appreciate you sharing your years of experience.
Thank you Matt. I’m a builder in Ontario, Canada for over 13 years on my own and 25+ years experience total. 95% of my clients are absolutely amazing and understanding when it comes to what I call hidden issues with a given Reno or build plus changes that my clients ask for during the build. I’ve been pretty lacks at the paperwork for change orders and it bit me in the butt for the tune of $20,000.00 for one big addition and cottage Reno back in 2016. My wife is my best sound board and adviser and I should listen to her more often when it comes to re-visiting the original contract when a client will ask for something more in the build. I always want to walk away knowing that their completely happy with the workmanship ( whatever the project) but sometimes it goes south with the talk of more money with the rare client. I also strive to build the best and pretty good is never an option. But I’ve also never been good at discussing monetary issues where a client has their guard up about going deeper in their pockets. Matt, I’d like to know where you got that program that shows your contracts and change orders. Looks amazing! Like my uncle in Scotland who used to own a heating and air conditioning business told me about being a business owner, “ if it was easy, everyone would be doing it” Cheers Stuart.
That program is BuilderTrend. Appreciate the comments brother. We sound very alike.
Excellent video. I’m an older experienced contractor, but it never hurts to be reminded. Cash flow counts.
Good Video, good tips! I'm a stickler for change orders in my remodeling business. My contract reads "any changes must be accompanied by a change order signed by contractor and homeowner". Even if it's simply a color or style choice. The homeowner will often say, "oh, that's okay, I trust you" I tell them, "it's not about trust, it's so we're on the same page". They agree. I do like your suggestion about informing that the change could alter the schedule, I'm putting that in my contract wording right now + will give sample C.O. at contract signing! Another thing I do is keep track of little extras I do, (complimentary items) such as fixing a sticking door/lockset, replace an outlet that doesn't work, minor things that are just good will gestures and frankly, often make working on the job easier for me. I keep track just in case at the end of the job, the owner asks for a credit since I was able to re-use something, or something was easier or faster than expected for me, I just take out the list of comp. items, and all is well. I've only had to do this a couple of times in 25 yrs.
Love it! Glad o could help and love to hear your tips too
Great video here Matt. It would be very helpful if you could do a episode on scheduling and time management especially is relationship to maintaining quality throughout a project.
Great ideas!
Matt, that was spot on! This aspect of contracting has always been the most difficult and frustrating for me. I like how you detail exactly how the change order process should go. ‘Early and often’ is great advice. I think giving a homage order at the time of the contract is a brilliant suggestion. Thanks for putting this great advice out there!
Love builder trend as well. Like to talk about labor cost, labor markup & overhead to determine labor rates also same thing in regards to materials and how it applies to different types of materials from a box of screws to all the framing lumber for a basement job.
Been following your channel for a while now, so much good stuff. I'm a boatbuilder who happens to build a structure every few years and it's really neat to have RUclips as a resource these days. I've already put a ton of your tips into the latest little house I'm making (love those 5 degree window cripples, way better than a sloped block). Anyway, great stuff, super cool to see behind the scenes stuff like this, you come off as super competent so please, share those boneheaded mistakes, it helps the rest of us to avoid them!
great topic and spot on. Looking forward to more videos about project management. Would love to see how you handle subcontracts and bidding
Very impressive set. You even went to the trouble to employ extras walking past!
Great episode Matt. Keep those changes documented