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Tales from the Sharp End: The Importance of Contracts (5/9/2011)
By The Urbane Installer
Do you remember my most favourite customer, Tarquin? Well he has just been eclipsed by another - Mustafa and his lovely wife. Mustafa is building a modern house in our fair capital and we have been engaged to deliver a lovely multiroom system with lighting control, a cinema and security system, all integrated with AMX and iPads.
Whilst quoting for the project it quickly became apparent that these clients were adept at the fine art of negotiation and confusion, and had run rings around not only us, but every contractor on the project. The problem was that whilst they have driven the costs of the project down and have tried their hardest to save every penny possible, they were still expecting a premium build and service, when in reality they were not paying for it.
The biggest problem however, was that they had not engaged a project manager for the build, expecting each individual contractor to liaise, communicate and do the project management between them. What they hadn't realised was that because they had shaved so much margin out of everyone, no one was prepared to do any more work than they were paid for, or was necessary.
I had the pleasure of attending a site meeting the other week where all the trades were there, along with the owner, but not the architect. Mustafa was going crazy, shouting and demanding. His issue? The fact that the build was sixteen weeks overdue. It is unlike me to keep my mouth shut, but for once, I did, and sat back and watched one of the most interesting spectacles unfold in front of me.
One of the other contractors stopped him talking, and quietly explained that the reason the build was so overdue was that no one was managing the contract, that the contractor had no clue what was going on, that no one had communicated any changes to the architects drawings to him, and that the work he had completed off site over the past three weeks was now pointless and would need re-doing. He was a rather annoyed 6' 3" Irishman, and I've never seen a client physically shake in a mixture of fear and anger before!
Our lovely client announced to the gathered seven-strong throng that it must be the architect's fault as he was managing the project. To make his point, he rang him on speaker phone in front of us.
Two sentences into his berating by Mustafa, the formerly meek-mannered architect suddenly suggested he 'shut up and listen' and went on to explain that the project was in no way being managed by him, that he had suggested that he engage either their own or a third party project management service, and that he had quoted him GBP£16k to do just that on the build. The fact that the build was 16 weeks over due at a cost in excess of a grand a week was entirely down to the client changing his mind, not being available to make decisions, and moreover the fact that he was being so thrifty on the build meant that the architect had no margin available to give any 'free' services. He went on to explain that in their contracts they have a termination clause that allows not only the client, but them as a provider, to cancel contracts for whatever reason is deemed fit.
The Need for a Project Manager
We've had trouble before with the lack of on-site project management and we have seen how much better a project flows and is delivered if covered by a proper PM, so much so, that our client contracts actually contain a clause about us not providing project management services over and above us installing our kit, and any additional costs or delays incurred by the lack of proper management will not be our responsibility and we reserve the right to charge any incremental labour cost this may cause.
To have a clause in for specific termination on a contract, that was a new one. Suffice to say, there is now a clause in our contracts that gives Technology Towers the option to terminate a contract if needed, and also gives the client the same level of cover.
All of this got me thinking about our industry and the contracts we use. How many of us give the client a clear concise contract that covers the work we will do, the hardware we will use, the scope of the works, the timescales involved, and goes into details of your standard terms and conditions? These documents are invaluable, not as something to hide behind, but as a clear and binding overview of the terms of engagement, the expectation of both supplier and client, but moreover, they offer both the client and us a level of security in law for the work we do. So my question this month is: do you use a specific contract for your business on every job you do, and if so what clauses do you have in there have been specifically useful? Answers please via the HiddenWires LinkedIn Group.
As for the Mustafas? Well, the architect has now walked away from them, as has the joiner and the interior designers. We are still only at first fix, and so have had no issues, and I'm hoping that they have now realised that they need to ensure the project is put in the hands of someone capable. In fact I've offered the services of one of our project managers, along with a quotation for his services, so we'll see.
The Urbane Installer is a home control expert based in Middle England. Messages can be sent to him via the HiddenWires LinkedIn group.
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