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Rawls007 said:
I guess I'm probably bending over a little bit on this one, but I've been trying to get hooked up with this contractor for a long time. He's a well established contractor in my area doing multiple million dollar homes, apartment complexes, and plenty of commercial work. I'm going to do this one for him but on any future work I'm not going to. I have a feeling that once he sees how we operate and gets comfortable with us he won't ask to hold my money on any future jobs.
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Well, at least you know what position you are going to be in. With all of that work he has, I wonder what happened to the last 3 electricians he had. His story is that they all sucked, it may be true, but if that is the type of business judgement that he has, do you think he is suddenly changing his ways and trying to hire a good contractor (you), or is he burning thru EC's because of payment issues?

Oh, and in case you didn't know, the "I've got a ton of work for you if you just bend over for me this time" trick never pans out...for the sub that is.

Please keep us posted as this project moves forward, I'm sure there will be stories to tell.

And with all sincerity, I wish you a problem free and profitable job.
 
How do you think the GC would have reacted at the contract draw negotiations if you had said "I've had trouble with my last 3 GCs, I need all the money up front"?

Next he'll be asking for free extras or negotiating them from you below cost.

There was a great show about flipping houses where the GC beat up all his subs & got free work from them. A carpenter wanted $500 to remove a carport. He gets talked down to $300 & then while he's there he agrees to tearing out paneling inside for free.

After a 4 week flip the GC made $40k.

You're about to get a graduate degree in the school of hard knocks.

Dave
 
this gc is playing fast and loose with other people's money, at some point the house of cards will fall, and everyone he owes money to will be the ones getting screwed.

good luck - hope it works out
 
Rawls007 said:
His reasoning was that he let his last electrician wire 8 houses before he realized the guy was a flake. Now every one of the houses have problems and he cant get the electrician to come back and fix them.
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And of course the "flake electrician was the absolute low bidder on all 8 of those houses. GC wining cause he got what he paid for. Waaaaaaa. You should have asked us before you decided to settle for a 3 month delay imho. I would have done my best to talk you out of that one, believe me on that.
 
I wouldn't do it.. 10% might be your profit margin on the job and this guy might dissappear. The only way I'd consider it would be if another entity, maybe a bank or something or a law firm is given the money and it is held for you pending no disputes with the GC. That way he can't take the money and run.
 
Rawls007 said:
I went to sign a contract for an eight thousand square foot home and when we started talking about a draw schedule he threw a curve ball at me. He said he wanted to hold 10% of the contract price for a YEAR after final inspections were passed while I warrantied the electrical system.:confused: I told him I have never heard of such a thing and wasn't willing to wait a year on my money. His reasoning was that he let his last electrician wire 8 houses before he realized the guy was a flake. Now every one of the houses have problems and he cant get the electrician to come back and fix them.

I explained to him that we are a quality oriented company and are here to stay while maintaining a good reputation. I told him that I don't ask for my final draw until the entire house has been walked with the homeowner to verify that everything works. Finally after a little negotiating I agreed to let him hold 10% for 3 months to make sure all the bugs have been worked out. I didn't really like it too much but figured it was a decent compromise.
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Tack on 10% to every job bid to this mutt
 
If you would have done what the GC originally wanted, that money (10%) would be worth less in a year. Even if you put that money in a one year CD what would it be worth?
 
I am really surprised as 10% held on each month is typical business as usual on many of the jobs we do.

Often the GC is being held back 10% by customer as well.

I was doing some extras for the GC on a large job that the GC was still waiting for their 10% on about a 80 million dollar job.

On retail store remodel we were waiting on about $120,000.00 over a few red devices. (We had used brown)
 
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Agreed, retainage is standard practice, but so is paying it all back to your subs once the project accepted by the owner. Some states have laws that the GC can not hold retainage once the job has been accepted, and even must pay the subs regardless of whether or not they have been paid, ie “pay if paid” laws.

Another thing to consider is to ask this joker for the names of his other subs for a reference. Then call the plumber an ask if he agreed to this scheme. I bet ya a buck he did not.

Slightly Off Topic:
A lot of states require a one year warranty on new work. Even if you think your state does not it would be a good idea to research it and know for sure. Aside from the one year warranty, you as the contractor are legally liable for your work for 10 years. Should a fixtures fall from the ceiling, and hurt someone, or a roof penetration you performed leak and cause mold damage, you can be held liable for the damage and should you have any assets, the vultures will come out to pick your bones clean. This is why a completed operations endorsement policy is a good idea. This little lesson only cost me $80,000 to learn.
 
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