What to do when Contractor is $8k behind in work?

Question

We didn't set milestones or goals, we paid them based on the work they said they had completed, and now we can't pay them anymore because they are 2-3 weeks behind...

How should we go about getting the contractor to do $8k in work which was already paid for?

(I'm expecting really sad answers...)

My thought was to set specific goals for this week to get done and hope that hey knock it out.

Use some psychology techniques to get them to take hold themselves to a higher standard for themselves... Not sure how it's going to go.

Taylor Jennings · Answer

@J  Scott

@Joel Owens  the work is being done is Grade C which is what we wanted.

The contractor has split his crew off onto side jobs which has put him behind on ours. We've paid $16300 over the last 4 weeks which would equate to paying 7 guys $15/hr for 40hrs each of those 4 weeks...

We may be halfway there I work completed.

He says he has to do side jobs now though so he can pay his guys but I'm like wth did the $16k go to? Lol there sure as heck haven't been spending their time on our job!

Frank Romine The $8k is strictly labor. We've worked with them once before on a smaller project.

I feel like there is hope still but like you said "Cool heads will prevail."

I had a text written up yesterday that basically said "Wth is up with the house? We paid you and your $8k behind..." But I didn't send it lol

Here is the email I just sent off:

Hey Chris,

Thanks again for stepping up on Spann and Kennington and getting them done! I feel it's rare to find a contractor who can "make it happen" and you have been able to do that. I really appreciate it since there is a lot of pressure on us to get stuff completed.

For you and I to secure more investment money we gotta get some things finished on 40th this week. I should have put together goals over the last 4 weeks to accomplish, but I didn't so I apologize for that =\

Click the link below to find the scope.

I know we can knock this out! I'll be out there this week.

Taylor Jennings · Answer

@J  Scott Oh man, ha!

I actually considered doing something similar to this but I felt bad about it... I guess the fact they are doing me dirty means I have to play the game.

How stupid though. I wish people in this industry could have some type of professionalism. You would think that working with thousands of dollars would involve some level of it...

Thanks for the suggestions! I'll see what I can do.

J Scott · Answer

It may be too late for this project (maybe not), but here is how I handle negotiation in these situations...

First, in my experience there are two types of contractors who get into this situation:

1.  Good Intentions But Desperate:  These are the contractors who really want to do the right thing, but circumstances (bad at managing money, bad at managing schedules, bad at managing subs or some combination) drive them to do the wrong thing (start slipping schedules, start going over budget, etc).

2.  Greedy Bastards Looking to Take Advantage:  These are the contractors who don't really care about doing the right thing and only care that they're still collecting checks, regardless of who they piss off in the process.

When dealing with the #1 type of contractor, I find that playing to his conscience tends to be the most effective route.  Act like a disappointed dad -- don't get angry, don't threaten, etc.  Instead, say things like, "You're really putting me in a tough situation here.  I need to get this house on the market soon or I'm going to end up losing a bunch of money."  Basically, act the way they feel -- desperate, scared and confused.

You're essentially playing to their sympathy/empathy.

When dealing with the #2 type of contractor, you need to be more deceitful -- you need to play to their greed and you need to play into their belief that they're smarter than you are.  The goal here is to set up a situation where they see a bigger payday by getting your job done than they do by walking away (let them see you as a "mark").

To do this, I like to act oblivious to the fact that they're screwing up (without going overboard).  Say things like, "You guys are doing an awesome job.  I thought this whole thing would go faster, but with all the surprise issues we've found, I'm just happy we're still making forward progress."  Once you've set them up to believe you're pretty happy with the work (playing into the belief that they are smarter than you), you can start playing into their greed.

A couple hours/days after you tell them how good of job they're doing, say something like, "I have two more projects I just got under contract.  Do you have other stuff coming up, or are you going to have time after this one completes to work on those for me?"  When they start asking questions, let them know the upcoming projects are bigger than the one they're currently working on (ask them if they have more subs they can bring in, because it's a LOT of work).  At that point, they're seeing $$$ in their head, and they see a bigger score down the road than the one they've already got from you.

Then you need to subtly hold them off from looking at the other projects (unless you have something you can actually show them), while encouraging them to finish up this one so they'll be ready to move on to the next couple as soon as they're done.  Dangle the other projects over their heads for as long as possible while getting as much work out of them as you can.  If you can convince them that they can take a lot more money from you on the upcoming projects, they'll prioritize getting this one done over the other projects they're screwing up elsewhere.

I also like to say to these guys, "I network with a lot of other investors.  A couple of them are looking for a good [insert their trade here].  Are you okay if I give them your number?"  Then half-jokingly say, "And by the way, they're idiots when it comes to rehabbing...so do me a favor and double your bid on their jobs so you can pass the savings on me on the next job we do together!"

Sounds cheesy, but it REALLY works...

Franklin Romine · Answer

@Taylor Jennings is the 8K tied mostly to labor or materials?  If this is the first time you have used the contractor then you might have a problem.   Sales and communication is what will probably get you through it.  You literally have to pursue, negotiate, threaten and brainwash your contractor to finish.  The last thing you want to do is kick and scream.  Cool heads will prevail.

Frank

Joel Owens · Answer

Look up Jason Scott and also Will Barnard among others. All they do is rehabs so I am sure they have great insight.

I think they first question that needs to be answered is ( How great is the work they are doing??)

Is the work completed great quality and they are just slow or is it marginal to crap??

If they are just slow but do great work then something might can be accomplished. If it's crap  work you really want to cut your losses and go with someone else.

No legal advice.