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General contractors, Specialty contractor relationships

February 27, 2008  |  from Markup and Profit Blog

In the last month, I believe I have heard from more specialty contractors having problems being paid by general contractors than I have heard in years. I know there is always two sides to every story, but there are some things that should not be happening here, gang.

So, I’m going to be bold and make suggestions to both general and specialty contractors. If you’ll follow these suggestions, we can stop a lot of this stuff.

Both Parties - If you make an agreement with another company, keep it. No yah buts, no stories, no excuses, no rationalizing, none of that nonsense. Keep your word. Do what you have agreed to do and do it on time. If something comes up that you don’t agree on, talk it out. Don’t get into name-calling, E-mailing and that stuff. Get face to face and resolve the issue(s).

You should have a binding arbitration clause in your contracts (and there should be a written agreement between generals and subs) that can be invoked by either side with a three-day notice. That gets any problem(s) solved quickly and gets the job back on track. This, by the way, also keeps the customer happy. Make sure your agreement specifies that you have a non-attorney as an arbitrator.

Specialty contractors - Do your work and do it well. Don’t ask to be paid until you have fulfilled your end of the bargain. The General Contractor is not a bank. Get your own financial house in order so that you can keep your payroll current without having to bug the GC about money before it is due.

General contractors - When the specialist is done with his/her work, pay them. Don’t make excuses or concoct stories about stuff being wrong because you can’t pay your bills. That is just plain dishonest. Specialty contractors should get a down payment from general contractors upfront for materials and the payment schedule should allow payment at least every other week for work completed. When the job is finished, the general should pay for that job by that Friday or the following Friday at the latest.

Specialty contractors - If a general contractor has a contract for you that states you will get paid when they get paid, walk away. That is nonsense. Specialty contractors should not have to finance the job for the owner or the general contractor, and have no influence over when the General contractor is paid or how they conduct themselves with the owner.

Finally, I am hearing more stories from specialty contractors about GC’s deciding they don’t like something the specialty contractor has done. So the General Contractor tells the Specialty Contractor not to come back, and the General hires another specialty contractor to fix and/or finish the job. Now, let me ask you general contractors that have pulled that stunt. Would you be okay with your customer calling you and saying, “Don’t come back. We are going to hire another contractor to repair your work and finish the job. You can pay the difference.”

If you don’t want to be treated that way, don’t treat your specialty contractors that way. That approach is just plain dishonest, no other word for it.

If you have a problem, talk about it, eyeball to eyeball. No phones, no emails, none of that. Get face to face and solve the problems. What we don’t need in this business is general and specialty contractors fighting. It is tough enough working with some owners, we don’t need to make it worse by having problems between ourselves. And it gives our industry one more black eye.

Filed: Project-Management