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Deposits on large Jobs #28069
08/09/03 04:41 PM
08/09/03 04:41 PM
F
Fredmeister  Offline OP
Member
Joined: Nov 2002
Posts: 23
Beacon, NY, US
Who asks and gets deposit on large projects with GC's ?

What is your experience?

Work Gear for Electricians and the Trades
Re: Deposits on large Jobs #28070
08/09/03 06:21 PM
08/09/03 06:21 PM
L
LK  Offline
Member
Joined: Jan 2003
Posts: 1,429
New Jersey
We always get a deposit from the GC and we run a credit check. But most important the contract binds the Owner, not the GC. The story the GC tells is nobody does business that way. If you are new to the business you may belive him.

Re: Deposits on large Jobs #28071
08/10/03 11:01 AM
08/10/03 11:01 AM
electure  Offline

Member
Joined: Dec 2000
Posts: 4,264
Fullerton, CA USA
If a company can't handle the expenses until it gets a first draw, it's probably not solvent enough to be taking on a project of that magnitude...S

[This message has been edited by electure (edited 08-10-2003).]

Re: Deposits on large Jobs #28072
08/10/03 12:58 PM
08/10/03 12:58 PM
E
Electric Eagle  Offline
Member
Joined: Apr 2002
Posts: 914
Alpharetta, GA
I try not to work for GC's that are shakey enough to require a deposit. I agree with electure, if you don't have enough operating capital to make it to the first draw, you shouldn't bid the job.

On large project the GC should have a payment bond that will pay if it doesn't. If they don't have a payment bond, you might not want the job.


[This message has been edited by Electric Eagle (edited 08-10-2003).]

Re: Deposits on large Jobs #28073
08/10/03 02:50 PM
08/10/03 02:50 PM
L
LK  Offline
Member
Joined: Jan 2003
Posts: 1,429
New Jersey
Eagle, Good advice, your point about, if you need a deposit your already in trouble. We found the big GC's doing production work usually, can never find that final payment, and by the time you take action, suprise they are under another company. Good contract with progress payments are your best protection. If payments stop we stop.
We are not in the banking business.

[This message has been edited by LK (edited 08-10-2003).]

Re: Deposits on large Jobs #28074
08/11/03 12:15 AM
08/11/03 12:15 AM
C
condenseddave  Offline
Member
Joined: Mar 2002
Posts: 25
East Stroudsburg, PA USA
We take a deposit in an escrow account, sort of a good faith down pahyment, the money can't be touched until BOTH parties sign off on it.


It's all about integrity.
Re: Deposits on large Jobs #28075
08/11/03 09:03 AM
08/11/03 09:03 AM
sparky66wv  Offline
Member
Joined: Nov 2000
Posts: 2,236
West Virginia
Quote
If a company can't handle the expenses until it gets a first draw, it's probably not solvent enough to be taking on a project of that magnitude


OUCH!

*Absolutely convinced to shut the biz down now...


-Virgil
Residential/Commercial Inspector
5 Star Inspections
Member IAEI
Re: Deposits on large Jobs #28076
08/11/03 09:49 AM
08/11/03 09:49 AM
R
Roger  Offline
Member
Joined: May 2002
Posts: 1,716
N.C.
Most large jobs I deal with are billed under AIA standards, forms G702 & G703. This is progress billing broke down into a "schedule of values". I always have line items for mobilization, temporary service, & bonds which can be billed immediately upon starting the job. With a good "schedule of values" you can "front load" your billing and never be behind the 8 ball.

Roger

Re: Deposits on large Jobs #28077
08/11/03 05:54 PM
08/11/03 05:54 PM
F
Fredmeister  Offline OP
Member
Joined: Nov 2002
Posts: 23
Beacon, NY, US
Front loading sounds good...

How do you front load a light fixture package or gear package that is worth about 1/2 of the project? Under most contracts, you cannot bill for schedule of value line items, until they are installed or properly stored. Storage is not always allowed.

Typically you can be looking at delays on the job that will prevent you from billing items for months sometimes.

Will you play bank for that long..

What about the suppliers?.. How many of them will deal with the " You get paid when I get paid if I get paid" terms?

Old-timers always brag that that's the way it has been since bread was a nickel.

Any tricks to take the bite out of very large material packages by including Deposit style line items on the schedule?

Does that fly.. or are we really more in the banking business than the Construction Business?

I have witnessed large Jobs with well known GC's and End-user Clients where there was no cash flow for 3+ months after starting a project. Yet many people still appear to agree to this type of abuse.

Re: Deposits on large Jobs #28078
08/11/03 05:58 PM
08/11/03 05:58 PM
L
LK  Offline
Member
Joined: Jan 2003
Posts: 1,429
New Jersey
Sparkey, Nice to see you post, missed your input. Dave noted he has the money in an escrow account. Our bank holds the escrow money, that is the deposit. Then the progress payments go to the bank, much safer way to operate. If the GC will not go along with that, He has no intention of paying.
We remember the line, I have plenty of work for you. I my area alone, I have seen more contractors put out of business and put in personal debt by these operators.

[This message has been edited by LK (edited 08-11-2003).]

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