Talk is cheap, but you cannot afford it - document everything.

There is an old saying that used to be posted on the walls of retail stores: “The Customer Is Always Right.” That concept was very effective in enticing customers to return and continue buying at that store.

I’m certain you have heard about the old school. I personally lived and worked under those standards, which simply meant, “A man is only as good as his word.”

I’m also sure that you have suffered financial losses dealing with customers who were not always right nor as good as their word. Our industry is filled with claims, liens, arbitration, lawsuits, liquidated damages and bankruptcy.

You must constantly be aware of those unscrupulous individuals, but never lose sight of the old principles.

There are three separate forms of business communication that are critical to maintain a positive and profitable working relationship with customers:
  • Body language. A friendly smile and a “how can we help you” attitude.
  • Verbal. Say what you mean and ask questions to clarify all doubts.
  • Documentation. This is called CYA (cover your butt).

During The Bidding Process

You must establish a written chain of authority with your customer, defining who can answer any questions or issue any change orders. You must never bypass your customer by going to the owner, architect or engineer. In addition to not getting paid for what advice or direction they might give you, you have made an enemy of your customer.

Let’s start at the very beginning by working with the complete set of bid documents - plans and specs:

1. Be sure you have all of the plans and complete specifications, including any alternates. Review every page and ask for any missing or questionable information. You must send a  Request for Information to insure your bid is complete and all-inclusive.

2. When you submit your bid, reference all addenda and include any value-engineering options and requests for substitutions or deviations.

3. If you are asked to negotiate your bid, document any changes.

4. When you are the successful bidder, submit your subcontract for your customer to sign. If you must sign his, read it carefully, cross out any item you disagree with, initial and date your exceptions.

5. Clarify the monthly billing and payment language in the subcontract. Normal procedure is to bill on the 20th and receive your payment on the 10th of the following month. You should include a 1 1/2 percent interest per month for late payments.

Cross out retainage if possible and try to collect for stored materials. All of this may be handled during negotiations:
  • You need to agree on a critical path written schedule that you and your customer establish together.

  • Discuss working hours, storage areas, safety concerns, jobsite security and jobsite chain of command.

  • Exchange business cards of key personnel with cell phone numbers to assure easy access. Instruct your personnel to respond immediately to recorded messages.

Once The Job Begins

When the project starts, you need to attend every jobsite meeting when your work is involved. You can ask questions and request written minutes to confirm whatever was decided.

1. Your project manager and jobsite foreman need to maintain a cooperative relationship with the entire management team. Keep in mind, any changes must come through the established chain of authority. It is imperative that you meet or beat the critical path schedule.

I highly recommend horse trading or sharing tools, equipment and small tasks. This creates a profitable cooperative working relationship with your customer and the other trades. Your foreman needs to document this to eliminate any future misunderstandings.

2. Your jobsite foreman must enter the following critical items into a daily log: date and weather; number of employees; work being performed; equipment on site; delays/problems; inspections; verbal instructions/changes; deliveries; visitors; and horse trading.

This daily log carries the same credentials as a ship captain’s log in courtrooms or during arbitration or mediation. It should be checked weekly by your project manager and maintained in your office for at least three years. If you are ever involved in litigation, you will appreciate the benefits.

3. When you are authorized to perform extra work on a time-and-material basis, your foreman should submit daily sheets to your customer’s supervisor for his or her signature. These costs should then be included in your monthly billing. Do not wait until the end of your project to collect for any extra work.

Establish a fair price on any extra work to eliminate a negative relationship that would cost you a future job.

4. If your customer changes the established job schedule, you should negotiate any added costs this might add to your manpower scheduling and job completion.

5. Your entire jobsite management team should be constantly value-engineering that project for your work and that of the other trades. This not only creates a better job for the customer, but for the other trades as well.

6. When something is off the track or any problems occur, you should notify your customer in writing or via e-mail.

7. Your foreman is responsible for maintaining a safe and clean working environment for your employees. He or she must notify your customer of any unsafe conditions that he or she is exposed to, but did not create. This should be done verbally and followed up in writing if no corrective action is immediately taken.

8. Last on the list is completing your punch list and warranty work. Your customer cannot get his final payment, which will also delay your final payment, until the punch list is completed. Your immediate response on warranty work will maintain a profitable working relationship.