|
Posted by Matt Barrow on June 9, 2007, 8:23 pm
> Hi,
> I just started a business as a plumbing contractor and I was
> wondering what the normal procedures on sending in a bid and signing
> whatever needed contracts. Currently, I just looked over the plans
> for the job site and I figured out how much it will cost for materials
> and labor. Now that I have that done, what else needs to be done?
Before you even respond to an RFP, you should be doing research into the
company submitting the request.
Look into the BBB records, as well as any outstanding or past legal actions
against them.
> What is this whole concept of progress payment? I understand you get
> paid for the work progress you make, but do I have to pay for the
> material expenses up front?
That depends on the contract stipulations.
> The construction company that I'm working with is saying that I have
> to pay for all the materials up front (without getting any money from
> the construction company, either a deposit or funds for the
> materials).
That's pretty much standard, but that's why you should be doing the research
mentioned above. Your #1 question should be, "How reputable is this bunch
and what is their history?"
Do not rely on referals...dig, dig, dig. (No pun intended).
> Before I entered into this business I assumed that I
> would get paid a deposit and the cost for materials once the materials
> arrive (this is even before I start doing physical work), and the
> progress payment is only pertinent to the amount of physical labor I
> put into it. Is the company trying to take advantage of me since I
> just started out in the business? What are the normal procedures?
You seem to making a lot of assumptions, and by this, you're setting
yourself up for a beating. I must say, too, that you seem fairly naieve
about the industry. There's a lot of people have specific skills but NONE
pertaining to running a business (and that entails much more than just doing
paperwork).
>
> I checked online to see how it's done and I couldn't find that much
> information. I found some sample contracts (not about plumbing) and
> there were at least 3 stages to the deal.
>
> 1) Initial deposit
That part might be included if you're contracting directly with an owner.
> 2) Cost for materials once the materials arrive (pipes, etc) + any
> damaged materials
> 3) Progress Payment for labor
> (then repeat 2 & 3 if it's a long job).
>
> Is this the normal procedure? If not, how can you protect yourself
> from the construction company from not paying you?
If some protection (for you) clause is not in the contract, walk away.
>I heard of horror
> stories from a friend that's also a plumber who put in $20,000 up
> front into the job (for materials alone, so basically the plumber is
> paying the construction company to work for them), and the contruction
> company never paid the plumber and just used the excuse that the
> company that hired the construction company is stalling their
> payments. In the end, the plumber had to file a lawsuit that can take
> up to 2 years to be settled.
I'd be willing to bet that's not the first time such a state-of-affairs has
occured with that construction company.
> I thought that the construction company is in charge of paying their
> subcontractor whether or not the company that hired the construction
> company is paying them. Is that just an excuse that the construction
> company is using?
It depends on the contract terms, and in it's absense, state law.
> Please help me clarify this because I really do not want to fall into
> the "horror" stories you hear about.
You're doing your research on step two, but you've missed step one: know the
state laws and find out about the company history.
> So to summarize. Is this the normal procedure:
> 1) Plumber purchases all materials and works for 1 month
> 2) After the month is over, the plumber files in an invoice with the
> construction company
> 3) Then a month later, the construction company pays you for that
> invoice
>
> and the process is repeated?
A GC or IC that works for me must provide materials. I pay GC's and IC's at
completion of phase (usually no more than 7-10 days) and accpetance by me or
one of my inspectors. This includes all material used up to that point. I
stipulate in my standard contract that I will inspect within 3 days of phase
completion and pay that segment within 48 hours thereafter.
> Thanks a lot. Your help is very much appreciated.
You need to do some study on contract law and business process. Also, you
need to find where, in your area, you can delve into a businesses
performance and legal history. Companies _typically_ have either a very good
track record, or an abysmal one - seldom in between.
Don't get too anxious to get some work and be willing to walk away (reject)
from a job that sounds fishy.
Good luck!
Matt Barrow
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap