Draw schedule?

[cdslotz]

And what kind of GC is asking you to carry that kind of risk?

The kind that already has negotiated the job he is asking ME to bid with only two other EC's competing.

The kind that gave me the 1 million dollar electrical job because the unsolicited low bidder was a performance and financial risk.

The kind that looks out for it's subs once they are on a job, and they know how to coordinate and schedule, assuring that I will hit my estimate.

The kind that is on the short list of developers as a premier contractor thus getting to build the high profile projects in town

The kind that would call me on bid day and tell me I might have a problem in my estimate because I'm too low, and not just sign me up and stick it in my a$$

The kind that would tell me that the owner would prefer an electrical contractor that was not low over me because of previous relations, and tell me he owes me one, and make good on his promise

I could go on and on.......

 

[krisinjersey]

That's all well and good, and I'm happy to hear you have a good relationship with a quality contractor and that the relationship is beneficial to both parties. But don't forget the reason you have that relationship to begin with though. MONEY! But with all that said, the best contractor in the world and all that relationship building is WORTHLESS the first, and (if you're intelligent) last time he stiffs you. The original post was from a guy who was unfamiliar with a draw. He could be an easy candidate for the deception many of us have fallen victim to in the past when we're blinded by the dollar and trying to keep the doors open. And maybe a guy who can't float the risk. We'd end up hearing about another one of us going under because he was mis- or under informed. The reality is that if you don't protect your investment, you're going to fail. If you trust easily you will get screwed, period. Build quality relationships, with like minded individuals, and make money.

 

[Sierrasparky]

Like some have already said.
A lot of us are feeling the need to take deposit money because many contractors owners are slow or do not pay. If you have the luxury to work with a GC that treats you well then that is GOLD. Keep that relationship heathy. For the rest Keep the billing up to date and don't let the payments slide.

 

[wireguy8169]

That's all well and good, and I'm happy to hear you have a good relationship with a quality contractor and that the relationship is beneficial to both parties. But don't forget the reason you have that relationship to begin with though. MONEY! But with all that said, the best contractor in the world and all that relationship building is WORTHLESS the first, and (if you're intelligent) last time he stiffs you. The original post was from a guy who was unfamiliar with a draw. He could be an easy candidate for the deception many of us have fallen victim to in the past when we're blinded by the dollar and trying to keep the doors open. And maybe a guy who can't float the risk. We'd end up hearing about another one of us going under because he was mis- or under informed. The reality is that if you don't protect your investment, you're going to fail. If you trust easily you will get screwed, period. Build quality relationships, with like minded individuals, and make money.

Well, said...

 

[rodneee]

east of the mississippi

east of the mississippi

You've got alot of confidence in your GC paying you on time if you're not collecting money upfront. Credit is extended to credit worthy companies, and it comes with the penalty of interest. I'm not going to place an order for $250,000 worth of equipment on the hope that I might get payed. That's how guys fail. It's a poor business decision to take uneccessary risk like that. You have to cover yourself and protect your business. And the idea that anyone east of the Mississippi not collecting a deposit is complete bull. I only know a handful of shops that have done it, and of those more than half are closing or in rough shape financially. If you don't have the guts to stick your hand out for a down payment, where do you get the guts to stick your hand out for a paycheck? If the only way you can get a contract is to float the job, do you really want the job that bad? And what kind of GC is asking you to carry that kind of risk? It's like signing a lean waiver, it's just bad practice. I get a deposit on EVERY JOB regardless of size(New Jersey is east of the Mississippi). It keeps the bills payed. If the customer doesn't want to pay the deposit, I don't want the risk or the headache of trying to collect later.

Always 1/3 down, 1/3 at rough inspection-before trim begins, 1/3 at final inspection or CO or TCO which ever occurs first. Customer may with hold 10% or $1000 (whichever is smaller) pending final inspection. It's in EVERY contract we put out. Change orders 1/2 down, balance at completion of change order work. We're not a bank. I don't get payed to chase money! The only contracts I'll look at that require me to float are Federal and they take forever to pay, but the money is guaranteed. And if you offer a 10% discount for 15 days they have to take it and pay you in 15 days.

first the good news: i just love this forum...just think, yesterday at this time i did not know 1 person east of the mississippi who got up front money...now thanks to you guys checking in, i know at least 6 or 7...now the bad news: i am the loser who has to place and pay for that $250,000 order you mention in your post, most times even before i get my money...do i get burnt?...yes, on a regular basis...do i cry? yes, but i see it as a cost of doing business...

 

[cdslotz]

first the good news: i just love this forum...just think, yesterday at this time i did not know 1 person east of the mississippi who got up front money...now thanks to you guys checking in, i know at least 6 or 7...now the bad news: i am the loser who has to place and pay for that $250,000 order you mention in your post, most times even before i get my money...do i get burnt?...yes, on a regular basis...do i cry? yes, but i see it as a cost of doing business...

Hmmm can you give an example of when you had to lay out $250K for materials WHEN you ordered them?
All orders like that are usually fixtures/gear, etc that will show up in stages 4-8 weeks down the road, that I will only be invoiced for WHEN they ship, and that I will bill for AS I receive them, then I pay for them on the 30 day supplier due date. In fact I pay early and take the 1.5% discount.
Sounds like you are not on good terms with your suppliers if they want up front money from you. Am I wrong or are you embellishing somewhat?

 

[ksmith846]

Hmmm can you give an example of when you had to lay out $250K for materials WHEN you ordered them?
All orders like that are usually fixtures/gear, etc that will show up in stages 4-8 weeks down the road, that I will only be invoiced for WHEN they ship, and that I will bill for AS I receive them, then I pay for them on the 30 day supplier due date. In fact I pay early and take the 1.5% discount.
Sounds like you are not on good terms with your suppliers if they want up front money from you. Am I wrong or are you embellishing somewhat?

Nope......and if you time your larger purchases on each project to be delivered just after the 25th of the month(the typical supply house due date) you get them to finance the material for up to 60 days. By then you have already billed and collected the money to pay them early and save the 1.5%

 

[rodneee]

Hmmm can you give an example of when you had to lay out $250K for materials WHEN you ordered them?
All orders like that are usually fixtures/gear, etc that will show up in stages 4-8 weeks down the road, that I will only be invoiced for WHEN they ship, and that I will bill for AS I receive them, then I pay for them on the 30 day supplier due date. In fact I pay early and take the 1.5% discount.
Sounds like you are not on good terms with your suppliers if they want up front money from you. Am I wrong or are you embellishing somewhat?

you are not wrong and i am not embellishing somewhat...i was making a point using the language of of "krisinjersey" as found in his post #20...

 

[bradleyelectric]

you are not wrong and i am not embellishing somewhat...i was making a point using the language of of "krisinjersey" as found in his post #20...

So your saying he was the 1 embellishing.. you were just following suit?

 

[krisinjersey]

Not so much

Not so much

Embellishing? I would love to say every material order was that big and the jobs were equally huge. We have most definetly had initial job orders that size, but we've never floated one. And whether you're ordering switchgear or lights or pipe and wire it doesn't matter. If you're extending your credit to cover the cost it's foolish. Even if the payment will not be processed or invoiced until you take delivery,you'll eat the intrest, the callcelation charges, the restocking fees, the trucking the labor on the phone coordinating. It's wastefull! The number was used to make a point. And regardless of the cost of the order, the point was not to uneccessarily finance the things that you should be covering with a deposit. Again, why bear uneccessary risk? Unless you like to risk your company and your employees security.

 

[cdslotz]

I remember when I started business I would do houses, unit priced and I billed on a 60/40% draw. When I got into commercial, I was able to get 1/3 1/3 1/3 sometimes. My service business was good and we got paid upon completion of the work on resi and billed on commercial.
My ultimate goal was to grow into larger commercial construction, and having worked as estimator/PM for several years I was ready to jump in and start bidding the bigger jobs with bigger GC's. All of these jobs are public and private jobs with owners, architects, engineers. The architect has in the general conditions of his spec, the bidding requirements, the schedule of values requirements, the invoicing and payment requirements, etc.
So bottom line is that you bid the specs and if you are the successful bidder, and awarded the job, you will comply with the specs. That's the part where they laugh you out of the room asking for up front money or a draw.
You either comply or don't bother bidding.
Some guys are happy with their small businesses and have control to demand their terms. That's great.
But to say those who don't do it YOUR way are stupid, and that's not good business, is well.....stupid

 

[ksmith846]

But to say those who don't do it YOUR way are stupid, and that's not good business, is well.....stupid

Well put.......Because if it was truly stupid, I would be the dumbest of all. All my work is commercial and paid on AIA draw requests after the fact.:roll:

 

[krisinjersey]

Who said anyone was stupid? I said taking unneccessary risk was foolish.

 

[satcom]

AIA contracts are nothing more then a guide to structure contracts for payment terms, and options, you can always talk terms, and discuss schedules at any time in the bid process, however we never entered into any AIA contract without legal advice, our attorney would in most cases, make changes in the contract, and structure terms we could live with.

 

[mtfallsmikey]

Musings from the house plumber...

Musings from the house plumber...

you are so right....i don't know 1 person east of the mississippi who ever got a down payment; yet everybody on this site claims it is standard operating procedure...

Well, my Dad did it for years, and I did it as well. Usually state law will mandate a maximum % or $$ that can be drawn. And, any special ordered materials need to be paid for in full in advance.

 

[Sierrasparky]

AIA contracts are nothing more then a guide to structure contracts for payment terms, and options, you can always talk terms, and discuss schedules at any time in the bid process, however we never entered into any AIA contract without legal advice, our attorney would in most cases, make changes in the contract, and structure terms we could live with.

It's all about what you can live with.

 

[Jeff Weissman Electric]

You have to feel this out yourself, trust your instincts.
GC's & EC's get different payment schedules. You cant compare the two.

Depending on your materials cost, supply house credit, and the time frame of the job. If its a fast rough in and you trust the Franchise or GC then ask for 2/3 upon passing rough inspection, balance upon final inspection.