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#164310 - 05/30/07 06:57 PM StreetWise 101 How to avoid getting taken
TheGreatSparkalini Offline
New Member

Registered: 08/08/05
Posts: 4
Loc: Sanford, Maine USA
Hi all,
I am a newby contractor that has not had the benefit of many hard knocks. Thought this would be a good forum to compile a knowledge base of common business mistakes to avoid. Kind of a self defense class for New EC's? I appreciate your input.
Ideas? How about these subjects?
Chapter 1 Customer Cheats
Chapter 2 Other Contracter Games
Chapter 3 The GC does what?
Chapter 4 To avoid payment, just.....

Business, Office, Estimating, Legal:
#164320 - 05/30/07 11:04 PM Re: StreetWise 101 How to avoid getting taken [Re: TheGreatSparkalini]
e57 Offline

Registered: 05/27/03
Posts: 2837
Loc: S.F.,CA USA
Contracting is about CONTRACTS! Shake the hand after one is signed.

Contracting is about CONTRACTS! The devil is in the details. Start/end, payment/schedule, terms and closure.

Contracting is about CONTRACTS! Vagaries are mis-conceptions that lead to unhappy customers who don't pay bills or worse sue you.

Contracting is about CONTRACTS! Never pay someone else for the privilege of working for them. Sweat equity does not buy much.

Contracting is about CONTRACTS! You need to spend money to make money, and need to make money to spend money to make money...
Mark Heller
"Well - I oughta....." -Jackie Gleason

#164323 - 05/31/07 07:07 AM Re: StreetWise 101 How to avoid getting taken [Re: e57]
Zapped Offline

Registered: 10/01/02
Posts: 481
Loc: Huntington Beach, CA, USA
Well said e57 - Contracting is about CONTRACTS!

Read a few sample contracts from other contractors. Compare, and make sense of the variations that you see.

Provide the best service and materials you can, and don't pay to work.

Never get yourself in an indefensible position if you can avoid it.

First of all, THINK.

#164327 - 05/31/07 10:39 AM Re: StreetWise 101 How to avoid getting taken [Re: Zapped]
ghost307 Offline

Registered: 05/09/05
Posts: 881
Loc: Chicago Illinois USA
Watch for language that can be interpreted for you to do the work over and over without being able to charge for it.

If it says "rough in for custom refrigerator", make sure that it says what unit; or what circuits, where and how high.
If you guess and then the equipment is different that you were originally told, getting paid for the change may be an uphill climb (I'm not paying you to change it because you did it wrong the first time).

"Verify in Field" and "Coordinate" are also pitfalls that you need to look out for. There's nothing wrong with either of these, but just make sure that everyone concerned is on the same page before you pick up a tool and start something that might not be exactly what the finished product is supposed to look like.

#164328 - 05/31/07 01:50 PM Re: StreetWise 101 How to avoid getting taken [Re: ghost307]
Celtic Offline

Registered: 02/26/05
Posts: 367
Loc: NJ
Good thoughts
~~ CELTIC ~~
...-= NJ =-...

#164341 - 05/31/07 08:25 PM Re: StreetWise 101 How to avoid getting taken [Re: Celtic]
LK Offline


Registered: 01/21/03
Posts: 1721
Loc: New Jersey
Carry plenty of change orders on the truck, and learn how to fill them out with all the details, get them signed for approval before you start any changes, No he is a good guy, No I have been working with him for years, No but it's a friend, No we are related, "No EXCEPTIONS." and if it's a special order change, get an on the spot deposit.

This applies if your a one man or a 100 man operation, in this case size does not matter.

Edited by LK (05/31/07 08:28 PM)

#164357 - 06/01/07 05:36 AM Re: StreetWise 101 How to avoid getting taken [Re: LK]
ghost307 Offline

Registered: 05/09/05
Posts: 881
Loc: Chicago Illinois USA
LK has an excellent point.

NO exceptions has to mean exactly that!

As soon as you make a single exception, you open the floodgates to folks who will whine that "you trusted Bill without making him sign this...but you won't trust ME?"

Treat everyone the same, whether you've been working with them for 20 years or met them this morning, and you'll gain respect as a someone who's serious about their work.

And always remember, there's business and personal. Never confuse the 2. If you're working for your best friend, he's just another customer. That approach can also keep you from ruining a good friendship if something goes South in the business relationship.

#164425 - 06/02/07 09:52 PM Re: StreetWise 101 How to avoid getting taken [Re: ghost307]
Tiger Offline

Registered: 05/04/05
Posts: 714
Loc: Crystal Lake, IL USA
Wait until you have several years experience before working for a GC...and read a book on negotiating. When you're familiar with negotiation tactics like "The Gasp" and "The Pause" you're ready to fish the deep waters of GCs.


#164445 - 06/03/07 02:47 PM Re: StreetWise 101 How to avoid getting taken [Re: Tiger]
LK Offline


Registered: 01/21/03
Posts: 1721
Loc: New Jersey

You have a point, because the first place the GC's look, is for the green guys, they know they are just starting, and have little, or no experience in real job costing.

#164482 - 06/04/07 01:46 PM Re: StreetWise 101 How to avoid getting taken [Re: LK]
ITO Offline

Registered: 11/26/06
Posts: 341
Loc: Texas
The more I read this thread, the more I want to respond.

The longer you wait to jump in to commercial work the longer it will take to figure out how it works. You will get taken on some things, but you will learn how to deal with this as you do more work its just part of the process; they are some lessons you pay to learn.

The most important parts of commercial contracting are scope, contract and project management. This is just a very abbreviated run through.

Part-1) When you bid the job, CLEARLY define your scope in your proposal. It is not uncommon to have a page or two of your proposal dedicated to just scope.

Here is a copy of my scope form I use for small jobs:

Scope-4.xls Link


11) Utility Fees- Make the owner pay these its part setting up his account. GC love to get you to do this, then you get to pay the utility bill too.
21) Surveying- This is the GCs job, make them do it.
22) AC Controls- If the Mechanical equipment does not work, and you did the controls, you will spend a lot of labor proving it’s the Mechanical guys problem and not yours. Its his equipment, let him make it work.
24)VFDs- Under no circumstance should you furnish the VFD, it is specific to the unit it serves and is furnished by the Mechanical contractor.
25) Starters- If you can make the Mechanical contractor furnish his own starters, its gets you off the hook for sizing them.
29) Control wire- It’s a pain, exclude it if you can.
31) Demo- You are an electrical contractor, not a demo contractor. Put “make safe” in your proposal and avoid the demo part.
35) Consumption of Temporary Power- Under no circumstances EVER pay for consumption of temporary power. It’s a deal breaker, if the GC insists just walk away from it, or you will get screwed. Let me give you an example; on a big box retail job when the conditioned air comes on two months before turn over, you could expect the electric bills to be $20,000 plus a month.
36) Task Lighting- Read up on what OSHA says is adequate temporary lighting, and then compare it to what the painters say they need to do their work. No matter what you put in your bid for temporary lights, it’s never enough so make sure your temporary lights are on an allowance and make it clear that the other trades need to provide their own task lighting.
38) Roof penetrations- If the roof leaks it needs to not be your fault.
39) Cutting Patching and Painting- No matter how hard you try, you just can’t paint that well with a pair of Kleins. You may want to include concrete cut and patch pack under #19 but be clear about it.
41) Cad Fees- Be clear on how your as-builts are to be prepared and who pays for what. Some project require CAD as-builts and some Architects love to charge for the backgrounds.
42) Access panels- Be careful with these, I have lost my ass on jobs in access panels.
45) Completed Operations Endorsements- This is part of the GCs insurance that they have figured out how to get you to pay for by putting it in your contract. If you miss this being slipped in your contract it will cost you about $1,000.
46) Fire Alarm System- You don’t have to exclude this but if you do include it make sure you have a sub that can do it on a “performance contract”, ie his stuff has to work and pass local inspection, regardless of what the plans say.
50) Telephone/DATA system- This is a glaring hole on most plans, make it clear your scope does not include this, or you will be doing and certifying it.
58) Sound System- It’s a pain avoid it.
59) Speakers- You might be surprised how many times this item gets snuck into the E-sheets.
65) Emergency Exit Panic Hardware- Avoid it like the plague. Look the rule of thumb is if you did not furnish it, then don’t agree to make it work. Obviously that won’t work for the light fixtures, but it does apply to all door hardware of any kind including magnetic locks. These items are notoriously problematic and the supplier will blame you if it does not work.

Part-2) Contract & Negotiations

So the GC gets your bid and calls you back, that’s good its called a “call back” and it means you were either had a number that is in the ball park, or you were the only one who bid it. When the GC calls you back and starts asking for breakouts then you know you are low.

Keep in mind don’t EVER give unit prices, and anything you break out keep the O&P and only give the cost back.

So you and the GC go back and forth a bit with your scope and they will want you to cut your price (on principle) a few hundred dollars then they send you a contract. Ok here is a subtly that takes few jobs to catch; the group in the GC’s office that bids the jobs and makes the deals with the subs is NOT the group that executes the contract and builds the job. Anything said or agreed on during negotiations does not mean Jack if it’s not in writing on your contract.

When you do get to see the contract they want you sign, you really need to read it. Things you excluded on your scope often get added back in, as well as new scope items you may have never even heard of. Pay special attention for items 11, 35, and 45 above, those items get added back in the most often in my world.

Take a red pen and ruler and mark line out and initial the items you did not agree to on your scope. Every now and then you will get a GC that screams bloody murder that, “you cant change their contract”…well guess what, you can. I do it all the time, as well as attach my scope letter to the actual contract as “exhibit A” and note that it is attached below where I sign.

Other items to note:
Sales Tax- Just because they are an out of state contractor does not mean they are exempt from paying sales tax in your state.
Schedule- does it fit your bid?
Change Orders- Does it specify who can sign for them?
Surveying and layout- Who does it?
Insurance Requirements- Do you have enough coverage.

Part-3 Project Management

Submittals- If its commercial contract work, then do submittals. I just can’t stress enough, how important this is. It only takes 10 minutes to find cut-sheets on the net for devices, floor boxes, pipe, and wire; make the supply house do the gear and fixtures for you, then submit them for approval. ANYTHING the owner or GC does not like, they can make you replace or remove at your expense if you do not have an approved submittal for the materials you used. If you have a approved submittals for your material, if they owner, architect, or GC wants to make a change then you get an opportunity to get your change order book out. The money I lost learning this lesson would put my kids through collage.

RFI- If you have a question put it in writing. Its called a Request For Information, and it can be the first step to getting a change order, or it can be the document that saves your but when the design of the project does not fit the intent.

Change Orders- Do not do changes without a written change order OR a written NTP (Notice To Proceed) from the person who is authorized to approve changes. If you don’t know who that is read your contract, and if you still don’t know, write an RFI.

Document your work- Take pictures of your work and the job as a whole. Get a job calendar and make notes of the milestones. Let’s say the GC was supposed to have the walls up on 6/15 and they did not go up until 7/1, make a note of it because when owner is expecting to move in on 7/15 your schedule just got compressed by 2 weeks and the sheet rocker is not even on the job anymore.

On every job I have ever done all I needed to finish was 100 electricians for one day…or at least that is what the GC always wants. When your schedule gets compressed the GC will start screaming that you don’t have enough labor and it’s your fault he can’t finish on time. This is when you break out the schedule, your pictures and job calendar out to start discussing a change order for impact. You won’t get it, but the GC will start working with you instead of just screaming at you.
101° Rx = + /_\

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