Friday, December 18, 2015

How Much is This Going to Cost?


Nearly everything you buy at a store or online is made before it’s sold. Construction is different. The job gets sold before work starts. That’s why an owner’s first question is likely to be about price. Experienced contractors anticipate the cost question and are ready with an answer that helps sell the job.

There’s no single best answer to the cost question. But quoting a price off the top of your head is a mistake. Even if you have a ballpark figure in mind, keep that number under your hat. Better answers include: 
  •          “That depends a lot on what you decide. It’s a little too early to nail down a price. But I’m sure we can live within your budget. What figure do you have in mind?”
  •          “I’ve seen jobs like this go for between $X and $Y. Of course, the cost could be less or more. It depends on finish materials and when you want to get started. Say the word and I’ll write up a detailed estimate.”
  •          “I don’t want to quote a number on the fly. I’ll work up some numbers and get back to you tomorrow.”

What’s the worst answer to the cost question?
That’s easy: Starting work without quoting any price at all. A recent Indiana case makes the point. A sump pump failed at the home of Vincent Cullers, flooding his basement. Carpet was wet, wood flooring had buckled, doors had warped, etc. First Response Services, a dryout contractor, got the call. After work started, Cullers signed a "Third Party Work Authorization" giving his insurance carrier, State Farm, authority to pay First Response. The work authorization included the following statements:

Therefore, I understand it is impractical to give an accurate quote for services before completion. I have been supplied with First Response Services' standard price list and agree to pay the prices listed.

In the event any legal proceedings must be instituted First Response shall be entitled to recover the cost of collection including reasonable attorney's fees.

When work was done, First Response sent a bill for $7,722.43. That’s when problems started. State Farm denied the claim. Cullers refused to pay the bill, insisting (correctly) that he never agreed to pay that amount. First Response filed suit for $7,722.43 plus their legal fees.

Cullers' attorney claimed the Work Authorization didn’t comply with Indiana’s Home Improvement Contract Act (HICA). The act requires a detailed description of the work and an agreed price. The contract First Response used didn’t even come close to that standard.

The trial court cut the claim in half, awarding First Response $3,780.38 and no attorney fees, reasoning that suit would not have been needed if First Response had complied with Indiana’s HICA. First Response appealed the judgment and lost again in the appellate court. First Response was out nearly $4,000 on the job plus many thousands more in legal fees.

Don’t make the First Response mistake. Use contracts that comply with state law. Construction Contract Writer does that for every state and for every type of work. The trial version is free.

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