Saturday, July 29, 2006

The Difficult Client

Let's face it, if you work in a service industry, occasionally you are going to run across a difficult client. One who is a micromanager, who needs to be overly involved in the project, and who actually impedes progress. Then there is the homeowner who can't make up his or her mind; who orders one type of tile and decides to remove it and use another. How can a contractor handle this type of client?

As always, start with the contract. Make sure the description of the work to be performed and the materials to be used is crystal clear. Verify that the client understands the scope of the project and what the end result will be. Try to use pictures or illustrations to ensure that everyone is on the same page.

Make sure that the client understands that all change orders will be in writing, and that new requests will cost extra. Designate a point person as the decision maker for the project and do not allow employees or subcontractors to perform work outside the scope of the contract without that person's permission.

Set boundaries for the homeowner's physical presence at the project. Require an escort before the homeowner can enter the worksite if there is dangerous machinery or there are unsafe conditions present.

If the client is interfering with the work by "micromanaging" the process, first find out if he or she is having concerns about the project. There might be a lack of confidence about a specific aspect of the work, or concern about a certain person who is working on the premises. If the homeowner is just someone who is a "nervous" type, then try to make his involvement positive.

Give the homeowner jobs to do that would be helpful and save time and money. Let her research new types of materials, investigate color schemes, whatever might keep her occupied and make her feel included. This should not just be busy work, but something that might help in producing a pleasing end result.

Once a contractor makes use of a homeowner's skills rather than finding him a hinderance, the contractor might find that his client progresses from being difficult to being relatively helpful. Managing the "difficult" client can actually turn the project into a successful endeavor when everyone works together.

Thursday, July 27, 2006

Terminating the Contract - The Contractor

When can a contractor terminate the contract? That question should be answered first and foremost within the contractor's contract itself. The contractor should have clear grounds listed for termination, how damages will be determined, and how disputes will be resolved. Hopefully you will notice that there has been a theme running throughout this topic. The contract should be comprehensive and contractors should have their contracts reviewed on a regular basis to make sure that they are availing themselves of all possible protection under the law.

What if the contract does not spell out when a contractor can terminate the contract? Then the contractor must have a clearcut basis for ending the work so he will not be found to have defaulted or abandoned the job.

The most obvious reason to stop working is when a contractor is no longer getting paid. Hopefully the contractor has a detailed schedule of progress payments in the contract, so he will find out quickly enough if the homeowner is not willing to pay him. One does not want to do too much work, or invest in custom materials, if a homeowner's checks start to bounce or are not forthcoming. If the contractor is not paid within a reasonable amount of time, then she should document that she will not be providing any further services until the funds are received.

Document, document, document...

The contractor needs to show that he or she is acting in an honorable fashion. He should make sure that the homeowner is not unhappy with the work, or not paying for some other reason.

What if the homeowner is making it impossible for the contractor to do the work? If other subs need to complete stages of the job before the contractor can do his piece, or if the homeowner hires outside personnel (an alarm company for example) who interfere in his progress? Again, the contractor must document why the project is not progressing, and what the homeowner must do in order to get the work back on track. Then he can state that the contract will be terminated if the homeowner does not cooperate.

Finally, there is the difficult micromanaging client (certainly worthy of another post). The contract should address the conditions under which a contractor is willing to work, but if it does not, then the contractor should again document the unacceptable behavior and explain that the contract will be terminated if the homeowner makes if impossible for him to finish the job.

Terminating the contract is a sticky issue. The contractor does not want to be accused of abandoning the work or being in default of the contract. At the same time, conditions can reach a point where it is impossible for the contractor to continue. For this reason, it is important to establish a paper trail to document the problems and the consequences if the homeowner does not comply with the contractor's requirements.

Friday, July 21, 2006

Terminating the Contract-The Homeowner

When can a homeowner terminate a contract? That should be determined by the contract, but if it is not, the law in your state will govern. However, one should also use some common sense to decide when the time has come. If the contractor has stopped showing up, then he has abandoned the job, and the homeowner has the right to mitigate damages by hiring someone else to finish the work.

If the contractor has failed to pull permits, or done something illegal, or blatantly in violation of the contract (substituting inferior materials, for example), the homeowner does not have to stand by and accept it.

What about when the homeowner just isn't happy with the work? That is a more tricky issue. Some homeowners have unrealistic expectations about what things should cost, or are not understanding when an unforseen problem arises. Homeowners should voice their concerns to the contractor and give him a chance to address the issue. If after numerous attempts at repair the problem continues (the leaks increase and will not go away), it may be time to hire someone else to fix the damage.

One should consider hiring an independent inspector to evaluate the work and write a report with his recommendations. This may protect the homeowner if the contractor states that the homeowner unlawfully terminated the contract. At the same time however, the homeowner should realize that most contractors will not have funds to return at the end of the day, and the easiest way for them to deal with problems is by fixing them.

I have seen many cases where homeowners are forced to terminate the contract due to poor workmanship, abandoning the job and failing to follow the building code requirements. This is the reason that homeowners should never pay for the job in full before it is finished. Otherwise they will not have any leverage if work needs to be repaired or if there are still punchlist items that need to be done. In Massachusetts, the final payment is not due until the work is done to "the mutual satisfaction of the parties."

Friday, July 14, 2006

Terminating the Contract-Rule #1

The issue of how to go about terminating the contract should be addressed in the contract itself. It can be agreed that either side can terminate the contract with a certain amount of notice in writing. The more complicated issue is what one considers a valid reason for termination.

For the homeowner, reasons might include abandoning the job (not showing up for a certain amount of time), substandard work as determined by an outside inspector, failure to comply with building codes or the pulling of permits, unreasonable delays (as determined by another contract provision), etc..

The contractor may find that the homeowner is causing delays, has unreasonably hired outside parties to perform aspects of the job, is contracting directly with subcontractors or making unreasonable demands of employees, is expecting work beyond the scope of the contract without being willing to pay for change orders, etc.

As you can see, the list is extensive. Although it is impossible to anticipate everything that may go wrong, the parties can attempt to define what constitutes reasonable grounds for terminating the contract. This can prevent numerous problems down the road.

Thursday, July 06, 2006

Terminating the Contract

When can either side terminate the contract? When is enough enough? There are numerous disputes that occur when either party terminates the home contractor-homeowner relationship. The homeowner may claim that the contractor has abandoned the job. A contractor may believe that the homeowner wrongfully terminated the contract, and that the job would have been properly completed if hehad been given the opportunity to finish. Courts may hold either party liable for wrongfully terminating a contract.

So, how can the parties know what to do when the relationship goes sour? I will cover this topic in my next series of posts, and welcome comments from those of you who have dealt with this issue.