Massachusetts Builders Blog

I've seen a new trend in contractor disputes lately, and it isn't pretty.  Some homeowners are making unreasonable demands on contractors, and bullying them into doing work without getting paid.  They unreasonably withhold payments, or impose penalties for delays that they cause.  They expect contractors to do all kinds of extra work without being paid or changing the completion date. I have had a series of these recently.  What is a contractor to do? When first meeting with a homeowner, trust your instincts.  If you are sensing red flags, do not take the job. Never let the work get ahead of the money.  If there is a change order, make sure that the payment is contemporaneous with the work. Make sure that all change orders are in writing and reflect any change in the contract price and date of substantial completion. Include a provision in your contract that entitles you to get attorney's fees if you have to go after a client for payment. Make sure t...

It seems as though clients' disputes come in waves.  The latest pattern that has emerged is contractors are finding that they are having trouble getting paid.  As usual, the best way to deal with this problem is by preventing it entirely.  The two tools in your arsenal are your contract, and written change orders. Prior to starting any job, a contractor or construction company should negotiate a clear-cut payment schedule that makes payment conditioned upon milestones. The work should never get ahead of the payment and vice-versa.  Payments should be broken down into numerous, frequent payments.  That way if either side is having money trouble, it will be discovered before huge receivables accrue. The contract should also have a clause that the contractor is entitled to stop work if payment is not made within a certain time period.  That way the contractor will not be accused of breaching the contract or abandoning the job if he refuses to wor...

Given the approach of the New Year, I have been reflecting on the mistakes that I see contractors make and how to prevent the severe consequences that can occur as a result.  If you follow these resolutions, I assure you that you will prevent most conflicts with your clients, or at least protect yourself in the event of a dispute. 1.   Make sure that all of your licensing and insurance policies are up-to-date.  In most states, the penalties for not being properly licensed can be severe, including double or triple damages, attorneys' fees and costs awarded against you.  Follow the requirements for your profession.  If you do renovation work on pre-1978 homes, make sure that you are lead-certified.  Have proper insurance to cover your business and your employees. 2.  Learn how to properly estimate a job.   This may be the biggest mistake I have seen contractors make this year.  They have cut their margins and not allowed for increases...

I received a call last week from a home contracting company in the Midwest about a franchisee who had received a letter from the EPA.  They were advised that a representative would be coming to their offices or the job site to review their procedures under the Renovation, Repair and Painting Rule.  Given that the federal fine can be as high as $37,500 per day, per infraction, they were quite concerned about how to handle this visit and avoid any problems.  I advised the following: 1.  Establish whether your work is covered.    a. Is renovation work being done on pre-1978 homes?    b. Does the work disturb at least 6 interior sq. ft. of paint or 20 exterior sq. ft. 2.  Put together a loose-leaf notebook with your certified firm and certified renovator certificates.  Include any  initial course completion certificate and the most recent refresher course completion certificate. 3.  Have a file...

I have encountered a new issue in home renovation projects that should put contractors on alert. Perhaps it is even time for a new contract clause.  I assume this is due to the state of the economy and the widely available access to information on the Internet, but homeowners are taking their construction into their own hands.  In one situation, the homeowner insisted on buying her own fixtures at a well-known hardware chain and asked the contractor to back the allowances out of the contract price.  In another, the contractor was told which personnel were acceptable on the job and was presented with a never-ending punch-list. In both situations, the outcome was the same; contractors were seeing their profit margins dramatically reduced. What to do?  As always, the responsibility for educating the homeowner falls on the contractor.  The homeowner needs to understand that the budget should allow for at least a 10% increase over the contract price as a ...

I just read a useful article on arbitration in construction disputes by attorney Robert C. Hendrickson of Duane Morris.  You can read it here:   http://www.jdsupra.com/post/documentViewer.aspx?fid=ccec1931-5c2e-4607-a7ad-fcb3481513d3&utm_source=twitter&utm_medium=jds&utm_campaign=building

A client really said this to me last week.  He said the difference between having my contract now vs. when he had a similar problem many years ago was that now he can sleep through the night.  Here's the story:  client was doing a major construction job for a homeowner.  The homeowner was delaying in making decisions, and the contractor was wondering if he could terminate the contract before making a major outlay for the next step. He called me, and I looked at his contract, which included the following provision: "If Owner fails to comply with the provisions of this Contract, Contractor may terminate this Contract and retain any deposit or monies received as liquidated damages, or at the option of Contractor, Contractor may proceed for specific performance or any other available legal or equitable remedies. Owner will be in default under this Contract if any of the following events take place: (b)    Owner in any way fails or refuses to perform any...

When the Renovation, Repair and Painting Rule came into effect, there was a flurry of activity as contractors became concerned about how it would affect their businesses.  They were facing the additional costs of certification and compliance and started thinking about lead poisoning in a way that they never had before. There was always a group of contractors who thought that it was all smoke and that it was not worth the effort.  They never got trained or certified, and were/are able to underbid their competitors for renovation jobs. As months passed, I heard the buzz of angry contractors who made the effort to do it right and follow the law.  Many felt that it was a joke.  Registration in certification classes waned. At the same time, the economy has improved, and contractors are getting back to business. They don't have as much time to learn the nuances of OSHA or deal with paperwork. In the last two months, however, stories have started cropping up around th...

Mark Paskell first posted this at his blog,  http://www.thecontractorcoachingpartnership.com/Blog-Contractor-Coaching--Construction-Business-Coach-EPA-RRP-Lead-Rule/ , but I think it is so important that I wanted to post here as well.  Make sure all of your subcontractors have worker's compensation policies if they have employees.  If not, you may be held accountable if someone gets injured on the job.  Bravo to the government of MA for making this information available to the public. Here is a brief excerpt from the Massachusetts Department of Labor website;                                       Patrick - Murray Administration Launches  Free Web-Based Tool Will help Public Verify if Businesses have Workers Compensation Insurance Policy Boston, MA - The Executive Office of Labor and Workforce Development (EO...

From Mark Paskell's blog:  http://www.thecontractorcoachingpartnership.com/Blog-Contractor-Coaching--Construction-Business-Coach-EPA-RRP-Lead-Rule/ The press release below came from the EPA.  It has been hard to persuade contractors that they need to become certified when it did not appear that the Renovation, Repair and Painting Rule was being enforced.  Now, there have been two substantial fines publicized: one in Connecticut last month ($30,700) and the one listed below.  It is time to have your contracts reviewed, insert clauses to protect you under the new law, and have your insurance policy reviewed for lead coverage! Kansas City, Kan., March 31, 2011) – Window World of St. Louis, Inc., has agreed to pay a $19,529 civil penalty to the United States to settle allegations that it failed to notify owners and occupants of at least 20 St. Louis area residential properties built before 1978 of lead-based paint risks prior to performing renovation work at those loc...

Here's a new post from Houston Neal: Surveying is going through a technological renaissance. The increased adoption of machine guidance systems has renewed the importance of the surveying trade. This technology calls for a highly-trained workforce, and surveyors are the most qualified for this job. But to get in on the action, surveyors need to learn to use this technology and re-brand themselves. GPS Machine Control Has Replaced Traditional Staking Unless you’ve been sleeping behind the wheel, you’ve likely heard of GPS machine control . Also referred to as machine guidance or automated machine control, these systems are widely used by heavy construction companies. They speed up work, improve grade accuracy and improve the billing and scheduling accuracy of jobs. For example, by calculating the amount of material moved in a day, they can substantiate bills or keep employees on schedule. The premise behind the technology is simple: just like using GPS in your car, a GPS machin...