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#158568 - 07/02/06 05:32 PM Continuing T & M discussion  
ayrton  Offline
Joined: Dec 2001
Posts: 201
What if after 2 years on the same project (T & M) all of a sudden customer starts checking prices and finds you have been marking up all materials, when in his mind (still cant understand this) "there should me no mark up on T & M."
Now they wnat to do an audit and want my supply house receipts from the beginning.
What would you do?

Business, Office, Estimating, Legal:

#158569 - 07/02/06 05:52 PM Re: Continuing T & M discussion  
LK  Offline
Joined: Jan 2003
Posts: 1,429
New Jersey
Did you have a signed contract, with the T&M terms, spelled out before you started the job?, If not, then there is very little you can do at this point.

[This message has been edited by LK (edited 09-20-2006).]

#158570 - 07/02/06 05:58 PM Re: Continuing T & M discussion  
iwire  Offline
Joined: Jan 2003
Posts: 4,391
North Attleboro, MA USA
The shop I work for would tell them to pound sand unless it was a condition of a contract which they probably would not have signed anyway.

Do you get to see the invoices of your supply house to see what their mark up is.

Bob Badger
Construction & Maintenance Electrician

#158571 - 07/02/06 06:24 PM Re: Continuing T & M discussion  
ExpressQuote  Offline
Joined: Apr 2006
Posts: 83
BC, Canada

I have to agree with LK,

If you didn't have a good contract up front, then they can try to ask for the costs. However, if there is no contract that gives them the right to ask, you have no obligation to supply the information either.

I'd say, the chances that you will lose this contract are pretty high, based on what you have said, and my interpretation. The only thing that might help is taking the head honcho out for lunch.

Explain how important his/her business is to you and your company. That you have done everything that you can to keep your pricing fair, but that you do need to cover your costs and your overhead. Explain that you are running a business and if they feel that they must persue this issue, then you will have to sever your working relationship with them. I know, this sounds tough.... It is the scariest thing that you may ever do... but on the flip side, if it is going there anyway, wouldn't you prefer to be the one to call the shots?

I doubt that if they haven't got a contract that requires you to disclose your true costs that the courts will support them in any claims against you, but it sounds like it is time to fire the client... but make it sound like a mutual break-up.

Then let them get other contractors to come in and quote the project and maybe even take over. They are going to learn that you have gone out of your way to take care of them, and if not, at least you have gotten the process over with and can begin to move on.

I have been here several times myself, and when I stood my ground and explained my case, it usually straightened things out... unfortunately, not in every case, but enough to make it worth going through the process.

I hope this information is of assistance.

I do try to avoid the lawyers, however, sometimes they are the best option. So don't be afraid to seek their advice if needed.


#158572 - 07/03/06 06:28 AM Re: Continuing T & M discussion  
iwire  Offline
Joined: Jan 2003
Posts: 4,391
North Attleboro, MA USA
ayrton, I was thinking more about my example of the supply house and realized it is not quite on point as they do not also charge by the hour.

So how about your automotive service?

You pay a high hourly rate that pays the mechanic and covers the overhead of the operating expenses.

Now he uses some parts and he charges you for them with a substantial mark up.

Would you then look at what you could get these parts for at the local DIY auto parts store and expect the mechanic to drop his price or even more unbelievable would you expect that the mechanic would let you see the prices he is paying for the parts?

Keep in mind I am not a business owner just a worker.

That said IMO your customer has unrealistic expectations and needs some education. Certainly they can find some low baller to come in and sell them the stock at cost.

Do you want to be that person?

We work at a few large facilities that refuse to pay mark up to any subcontractors.

For them we work for 'T' only at a higher than normal rate as they supply the material (they have in house electric supply shops)

We also rent them our large equipment when needed, pullers, threaders etc.

The company I work for makes sure they stay in the drivers seat not the customer.

Which seems to be what ExpressQuote was getting at.

Good luck, don't become a door mat.


Bob Badger
Construction & Maintenance Electrician

#158573 - 07/03/06 07:24 AM Re: Continuing T & M discussion  
Dnkldorf  Offline
Joined: Dec 2004
Posts: 1,064
nowhere usa
I'm not sure if this helps out at all, but round here, supply houses have different price structures for different people.

Joe Shmoe homeowner pays a higher price than say the average EC buying 100K worth of stuff a year does.

Bigger EC's spending 7 digets a yr, are priced even lower..

Maybe, I say maybe, if you do alot of business with your supply house, you can have them re-quote everything you bought, and show the Joe Schmoe price.

I know it would require alot of work..

I like Bob's approach of telling them to "pound sand".

#158574 - 07/03/06 07:34 AM Re: Continuing T & M discussion  
iwire  Offline
Joined: Jan 2003
Posts: 4,391
North Attleboro, MA USA
I like Bob's approach of telling them to "pound sand".

Not my approach, my bosses approach and considering I have worked steady with great pay and bennies I figure they know what they are doing for the market we are in.

Bob Badger
Construction & Maintenance Electrician

#158575 - 07/03/06 08:19 AM Re: Continuing T & M discussion  
mahlere  Offline
Joined: Nov 2005
Posts: 507
New Jersey
before home depot and lowes took america by storm, there used to actually be a retail price and a contractors price at the supply house. contractors price was usually 50% of retail. It allowed you to simply buy at contractor, sell at retail. If the customer called the supply house, they were quoted retail. Actually, similar to what dnk said above.

unfortunately around here, the difference between contractors price and retail price at the supply house is negligble (sp?) And depending on the product, the HO or customer can sometimes buy it cheaper at HD or Lowes than we can at the supply house.

This project is probably way over budget. If it's been going on for two yrs at T&M, they are also over budget on the other trades as well. Now someone is being taken to task for this. Who is asking for the invoices? The owner or someone 3-4 notches down their totem pole? If it's the owner, you may be able to talk to him. If it's the underling, he will stop at nothing to save his boss money (and his butt a job)

So in a round about way, if you are in the postition to do it, take express quotes advice and talk with the manager/owner. Otherwise realize that the underling that is on you for this will be pretty zealous to prove to his boss that he can save them money (as short sighted as that savings may be) and realize that you will probably be off the job soon anyway. No need to give them any money back. Not much help, but hopefully the responses you get will clear things up.

good luck

#158576 - 07/03/06 01:19 PM Re: Continuing T & M discussion  
ayrton  Offline
Joined: Dec 2001
Posts: 201
Your responses have been very helpful. You reinforce my feelings on the matter. It is my mistake I realize for itemizing things to begin with. This customer has always been tgood pay. They have trusted me and only looked once or twice at other EC's in the seven years I have worked for them.

Somebody touched on it when they said the job is over budget. I can totaly expect that the owner didnt know what he would be spending in total.

I have also spoiled this customer by itemizing things out the tenth degree. They are the only customer I do this for. But I felt most times it was for the best, and like I said they have been good pay, pretty much no questiuons asked.

When put over the phone to me last week by the controller, who by the way acts as the GC (with no construction experience) stating the owner wanted to see receipts and telling me there is no mark up on T & M I felt insulted and betrayed. I was being told how I am suppose to run my business.

I feel I have a good enough of a relationship with the owner to come up with a compromise and work this out. The controller has definately done things through out this project and others which if anything has cost the owner more money, because his lack of construction knowledge and splinelessness.

They like nothing but cheap contractors. I was cheap before, but I have since learned how to charge to be successful. It seems I am the only contractor in the trades they use who charges accordingly. One because of the type of field we are in and second, I think is becasue of the relationship I thought we had. I always tried to make them feel and see that their intersts where my sole concern.
Live and learn I guess...that will be my epitaph

#158577 - 07/15/06 05:03 PM Re: Continuing T & M discussion  
tkb  Offline
Joined: Dec 2004
Posts: 94
Don't forget that the true cost of material is not just the invoice from the supplier.

The costs should include the invoice, taxes, shipping, time for ordering and receiving, storage, and other overhead.

When a customer says "why are you charging me $5 for a switch I can get at HD for $.79", they truly don't know what it takes to get this switch to them and don't understand the hidden costs.

Maybe a little explanation on how cost is calculated is in order if you want to keep this customer.

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