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RE: Eating $$ (Over-Runs)

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Its actually very easy.  Having a contract with a clearly identified
scope of work specified will help you to limit the "extra" work.  In
addition, clauses in your contracts should clearly specify the
additional services charges.  Many times you can inform the client at
the time that he/she requests the additional work that this was not
included in the contract.  Get the additional service authorization in
writing prior to the completion of any work.  Many times people are
every scared of the time and materials type contract; a better approach
may be to quote them the additional service as a lump sum.  It may be
simpler to explain it as similar to taking your car in for repair.  It
may be expensive but at least you know, prior to telling the mechanic to
fix your car, what the maximum cost will be. 

Most lay people are used to receiving some sort of "product" in their
hands upon completion of a service.  They do not understand the time
required to "explore" the most best combination of structure and
economy.  I tell people that "I can design anything they want as long as
they have enough money to build it".  This typically not being the case,
they tend to really appreciate the fact that you have taken steps to
design the most economical solution.   As a backup, I insert a clause
stating that I reserve the right to cease work on the project with 48
hours of written notice and that I will not be held responsible for any
costs incurred as a result of my work stoppage (I have never had to
exercise this option but in the worst case situation would be able to
stop the spillage over the dam before complete washout happens).  

Now the tough part happens.  Actually collecting the additional costs.
Many times I have been paid the original contract amount and had the
client "ignore" the additional services charge.  The threat of a lien
sometimes will coerce the money out.  Sometimes the actual lien will
prod the debtor to action.  And then there are the cases where you pray
that the owner wants to sell their house because that's the only way
they will be forced to clear the lien.  One way is to demand payment
when you hand them the calculations.  This should be clearly specified
in the contract.  Unless I have worked with a client in the past and
have established a working relation, I will always request payment prior
to handing over my sealed engineering/details/drawings.  It doesn't take
to many statements of "I'll cut you a check tomorrow" before you learn
to say "well then I'll supply your solution tomorrow".  You don't get to
take your groceries home and eat them before you pay for them do you?



-----Original Message-----
From: Ed Fasula [mailto:tibbits2(--nospam--at)metro.lakes.com]
Sent: Friday, June 25, 1999 10:58 PM
To: seaint(--nospam--at)seaint.org
Subject: Eating $$ (Over-Runs)


I work for a small sole proprietorship.  (Me, the boss, and a drafter).
We
work on small projects combined with small consultations in the $350
range.
I'd like to find out how others deal with, or avoid, the biggest pain in
the
neck in our business: when a tightly bid or estimated (as they all are)
project gets more complicated.

Most of our customers see coming to an Engineer as a notch worse that
going
to the dentist.  It's just not workable to explain to them the job is
twice
what you told them before they added the, "oh, there's one more little
problem I need you to address."

Here is an example from this week.  I was asked to come by and recommend
a
repair for some residential wood trusses that needed to be snubbed 4"
and
hung from a girder.  The contractor wanted the design on the spot, since
it
was so simple (we refuse to do that anyway).  In the end, I did the
following work:

1).  Design repairs for snubbing (2) different types of trusses.
2).  Design repairs for (3) types of trusses to be involved with
installation of 30" wide skylights that obviously don't fit between
trusses
at 2'-0" o.c.
3).  Investigate connections and truss designs to hang an existing (2)
ply
girder truss which supports a 20' LVL beam from a new (3) ply girder
truss
which was installed 1 1/2" from the existing truss - leaving no room to
install fasteners in any reasonable way, much less get the hanger in
there.
4).  Investigate cantilevering the existing girder truss 4' and snubbing
the
end 6".
5.)  Finally, convincing the contractor to move a 4' wall 2' to pick up
the
load on the existing girder and solving the whole problem.
6.)  Total of (2) visits to the site.

Now, I warned him that we bill by the hour and the cost would be more
than I
originally told him.  Before all the new "challenges" I had estimated
$550
for the common truss snubbing and skylight repairs.  Still, we did not
feel
we could bill out more than $1200 for the job.  What makes it harder is
that, after we did all sorts of work, I was finally able to convince him
to
make changes (bearing the LVL beam and using narrower skylights) so
there
was not much "to show" for our work.  In the end the business ate some
time
(money) in addition to my coming in a early twice to work on "my own"
time
just to ease the cost on the business and meet the contractor's time
demands.

Are we just chumps, or do others out there have similar experiences?  It
seems that with the small jobs, it is so easy to run over expected
costs,
hard to convince laymen why it honestly gets much more expensive, and
often
becomes rocket science because of constraints from sources such as picky
people or unprofessional actions by careless builders.  And it's not as
if
you can charge more on the simple ones to help cover costs.  There
always
seems to be someone willing to do an easy job for cheap.

My boss built this business over 20 years as a 1 man show.  Sometimes I
wonder if these little jobs are feasible with the added overhead of 2
employees.  Maybe we need to search out more customers with advertising
and
raise out rates ($82 for him $70 for me).  I am just trying to address
this
problem analytically.  Any input would be helpful.

Regards,

Ed