# Customer wants to get out of part of scope of work



## fjn (Aug 17, 2011)

*contract*

As A.Lincoln said to Grant, when Grant had the sword to Lee's throat and his foot on his chest asking what should i do. Lincoln said,let him up easy. If a four year bloody civil war can be ended like that, surley a kitchen make over can also.


Do not be penny wise and dollar foolish. If you let them up easy they may never tell a soul ever. If you do not they will tell every one they know. Guess what,you will never know who they tell and never ever get a chance to tell your side of the story.


There is in old saying,you live and die by your reputation and your only as good as your last job,period.


If you want to risk your reputation go for all the money you can.If you value it,be a gentle with them as possible.


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## calmod (Aug 16, 2011)

*leave a little something on the table*

I once had a sub that told me that he liked working with me because I would leave a little something on the table. I negotiate at the front end and try to be fair with the extras and additional work. It seems to be working for me. I would say that if you have been able to add close to 50% to the value of the project on in extras you must not have had a very detailed schedule of values to start with. It happens all the time with me that I start work with undefined allowances and the customer adds as we go. I write a detailed change order and collect all of it up front in an effort to keep them informed as to where the total cost is going so they don't keep adding up the incidentals and not have the cash to finish the whole scope of work. I would be happy to get the net cost of materials off of the contract and keep the profit and overhead. If they don't have the money what's the point of doing the work. Happy Thanksgiving to all and good luck


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## kitking (Oct 8, 2012)

I don't know why remodelers use "change order" when I did remodeling, I always called them AWO's "additional work orders" every change means more work... Change order sounds like its no big deal and you should just throw it in for free... Even if they are changing the color of the paint... There is work involved because you have to update the painter, the paint store, send emails, text, call, or what ever... You may not charge for it, but... Personally, I would never use a change order I always end called it an additional work order... And when they see a pile of additional work orders, at the end of job, psychologically, they are already prepped that you did more work 

Sry, I know it was out of the blue, but was just thinking about it


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## J L (Nov 16, 2009)

kitking said:


> I don't know why remodelers use "change order" when I did remodeling, I always called them AWO's "additional work orders" every change means more work... Change order sounds like its no big deal and you should just throw it in for free... Even if they are changing the color of the paint... There is work involved because you have to update the painter, the paint store, send emails, text, call, or what ever... You may not charge for it, but... Personally, I would never use a change order I always end called it an additional work order... And when they see a pile of additional work orders, at the end of job, psychologically, they are already prepped that you did more work
> 
> Sry, I know it was out of the blue, but was just thinking about it


Why do you wait til the end of the job to submit your additional work orders?

Change orders are paid in full in advance. No surprises at the end of the project.


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## J F (Dec 3, 2005)

Just to play devil's advocate...let's say the op has this work contracted and scheduled (which it looks like).

Who's responsible for the loss of income to the op if the contracted work is canceled with no cost to the h/o? 

Many times when scheduled work is no longer on the schedule, it's not so easy to just fill that schedule, whether other projects can't be started early, or there are no other projects to fill the void. 

So why can a h/o just make a contractor go without income if they decide to arbitrarily cancel _contracted_ work?

An earlier post it was stated something along the lines of_ "you got 40k extra from them on the kitchen..."_ As I read it the 40k was what the client added, so not sure where that figures into the equation.


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## Jaws (Dec 20, 2010)

Metro M & L said:


> I heard a saying once, you keep what you have by giving it away. case in point, I bid some work a local contractor and there was a misunderstanding on the scope. I reduced the cost because the scope was less than I originally understood it to be. Next thing I know I did another 75k worth of work for thar client. I think of generosity, fairness and kindness as a mandatory marketing expense. everyone is so sick to death of corporate rip offs, fees, switcharoos and lies when they realize you're actually a decent guy the trust and the money will flow to you.


Exactly. :thumbsup:


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## summithomeinc (Jan 3, 2011)

abmremodel said:


> Well if you were in my area, and market, you'd understand. Going to court for 2 Ho not paying out on the job. 200k kinda of makes you realize that the world isn't a fairy taille.


Not real sure what you are trying to say?
Are you saying that you are entited to 100% of the contract price, even if you didn't do the work? 

Even if you go to court a judge is only going to give you enough to cover your costs. (what he thinks are the costs) 

Wouldn't it be so much better to say "Mr.&Mrs. HO, We will be deducting xx,*** from your bill because we are not doing that portion of the contract." Then explain what work you did do and what you are charging for that portion of the work?


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## ohiohomedoctor (Dec 26, 2010)

I dont know what all this griping is about. When properly handled a reduction of scope always translates into a hirer profit margin. It goes back a lot slower than it comes.


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## kitking (Oct 8, 2012)

RemodelGA said:


> Why do you wait til the end of the job to submit your additional work orders?
> 
> Change orders are paid in full in advance. No surprises at the end of the project.


Lol.. I didn't... I used to charge for them as I went... But, my old remodel company did a lot of work around philadelphia... lets just say, the customers around here are a big pain in the ass... and have very "selective memories"!!!!! 

i dont do remodeling anymore, i sell cabinets to remodelers... my point was just that "change order" sounds simple, and no big deal to clients... "Additional work order" lets them KNOW that when they make changes, etc... It's more WORK... And time!!! I don't tell you how many times I've had a client upset that a remodel was "taking so long" when their changes, indecision, lack of action, etc... Added delays, and screwed with my schedule... To sit down with them and show them all the WORK they ADDED is a great tool in keeping controll of the client and the job.


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## kitking (Oct 8, 2012)

ohiohomedoctor said:


> I dont know what all this griping is about. When properly handled a reduction of scope always translates into a hirer profit margin. It goes back a lot slower than it comes.


I would agree with that and take it one further... No judge, is ever going to MAKE a homeowner do work if they change their mind, and there is no loss for the contractor... Besides, the homeowner WILL bad mouth you till the day they die... And people might not necessarily believe them, but these days, I bet most just wouldn't risk it, and move on to e next contractor.


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## J L (Nov 16, 2009)

kitking said:


> Lol.. I didn't... I used to charge for them as I went... But, my old remodel company did a lot of work around philadelphia... lets just say, the customers around here are a big pain in the ass... and have very "selective memories"!!!!!
> 
> i dont do remodeling anymore, i sell cabinets to remodelers... my point was just that "change order" sounds simple, and no big deal to clients... "Additional work order" lets them KNOW that when they make changes, etc... It's more WORK... And time!!! I don't tell you how many times I've had a client upset that a remodel was "taking so long" when their changes, indecision, lack of action, etc... Added delays, and screwed with my schedule... To sit down with them and show them all the WORK they ADDED is a great tool in keeping controll of the client and the job.


A change order should include a few items. 
-Cost of the change order
-original contract amount
-cost of all change orders to date
-original contract amount plus all changes
-effect on the schedule (additional days)
-total additional days from all changes

Clients everywhere have selective memories. It is our responsibility as professionals to not let that happen. When properly documented, selective memory goes away real quick.


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## DaVinciRemodel (Oct 7, 2009)

J F said:


> Just to play devil's advocate...let's say the op has this work contracted and scheduled (which it looks like).
> 
> Who's responsible for the loss of income to the op if the contracted work is canceled with no cost to the h/o?
> 
> ...


We have a cancellation clause in our contract. Should the HO decide to cancel an agreement (or even portion of an agreement) there is a penalty for doing so. We are entitled to collect what we have invested into the project plus up to 7 days of costs plus 10% of the cancelled agreement (or portion cancelled). Here are a couple of examples of how it would work:

Example 1:
We have a signed agreement to remodel a kitchen for $100k starting January 10th. The HO sends a letter of cancelation for the entire project on December 30th. As of the 12/30 we have $10k invested (some time and some special orders). 

We would then invoice the HO for the $10k invested and $9k (10% of the agreement’s balance).

Example 2:
We have a $200k agreement for an addition on the west side of the house and a kitchen remodel. This is one agreement for the total of $200k to be completed in two phases (first the addition then the kitchen). For simplicity of this example each phase is $100k.

So we are wrapping up on the addition and the HO says “we’d like to hold off on the kitchen”.

We would then look at what we have billed for the addition – we have $100k invested in the addition (we’ve already collected $90k). By the time the cancellation letter was received, we have $50k invested (and collected) into the kitchen already ($25k in cabinetry and $25k in appliances). Over the next 7 days it will cost me $3k to get my equipment off site, cancel subs, deliveries, etc. 

We would then send an invoice for $17.7k ($10k outstanding on the addition, $3k for the 7 day cost of cancelling and $4.7k (10% $47K of the kitchen portion cancelled)).

Some Notes on the above:

We learned the hard way. We had a situation similar to the second example happen about 20 years ago. We then had our attorney add the cancelation clause to the contract. It has never been used since.

When we go over this clause at contract signing, new customers always pause and ask about it. I explain that a cancelation causes enormous pain in our schedule and income. “We’d rather complete the project and collect all the money but if it is necessary to cancel the penalty softens the blow.” “In many cases, I’m turning work away counting on the time necessary to complete your project and I have little chance of getting those prospects back.” “If you’re thinking you may need to significantly reduce the project – now would be the time to discuss it.” No one has ever refused to press-on (even those with their own attorneys reviewing the contract).

We are usually ahead of the project with our payment schedule. I collect for 100% of all special orders (cabinets, appliances, windows, etc.) at contract signing. Although the clause has never been tested, I think in most cases I would be sending a refund – not trying to collect.

A cancellation is much more painful on large projects than small ones. If a small one cancels we just go play golf.

If I were in the OP's shoes, I would - not only - NOT try to enforce the entire contract, I think I would also not enforce our cancellation clause. Easy for me to say - I'm up to my a$$ in work - I'd like some time off.

Edit - Sorry for the wordy post!


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