Have you ever hired a contractor that didn't finish the job? Here's what you did wrong and what to do next time, to avoid that. This is how to get contractors to finish the job:
Contractor Agreement (Simple One Page Contract)
Contractor Agreement (Complicated, Big Job Contract)
How to Get Contractors to Finish the Job: Begin With the End in Mind
Contractors have more work than they know what to do with. This unprecedented high demand means contractors can take shortcuts and not worry about tarnishing their reputation. However, not all contractors are bad. I have two videos, Seven Things to Never Say to a Contractor and How to Find Great Contractors which together sum up my attitude on how to hire and work with contractors. Now more than ever, it's important to have a strategy when dealing with contractors.
The first thing you need to know about getting a contractor to finish the job is this: Begin with the end in mind. How you set up the deal will determine if the contractor finishes the job. You can motivate them to finish by building accountability into the deal. There are three main components that you need to build into the deal to achieve this.
1. Strategic Installments Tied to Specific Milestones
The first component that builds accountability is strategic installments tied to specific milestones. Most contractors expect payment throughout the job because they don't want to finish all their work and then have you not pay them. Of course, you don’t want to pay them all the money up front because then they wouldn't be motivated to finish the job. You don’t want either party to have the advantage over the other. These rules apply irrespective of how trustworthy the contractor is.
With strategic installments tied to specific milestones the contractor never gets ahead of you, and you don't get ahead of them. Strategic installments are fair, reasonable, and paid out when the contractor meets specific milestones. And since every project is different, you need to understand what the project is and what those milestones are.
As work is done and milestones are met, you're doling out installment payments in such a way that there's still an incentive to continue working yet they can pay their subcontractors and their team. However, you need to be careful and make sure that there is enough pay out at the end of the job to motivate them to fully complete it. The fundamental way to get them to finish the job is to make sure there's a carrot at the end dangling in front of them.
Purchasing Materials for the Job:
I recommend you purchase your own materials. This is helpful because when you are paying an installment at a specific milestone, you are just paying for labor, not materials and then they can't get ahead of you. I have accounts with different paint, lumber and hardware providers and receive the same discount the contractor does. There are exceptions to this rule: electrical, pipes and plumbing infrastructure and HVAC units.
If the contractor is buying materials, you need to see receipts. You need to make sure that they are your materials, not something the contractor had from another job. You also need to ensure that the contractor delivers your materials to the job site. A way they can get ahead of you is by holding all the materials and not bringing them to the job site.
2. Be Extremely Specific
To ensure the contractor finishes the job you need to be extremely specific about the details of the milestones. This component is crucial when working with contractors because they thrive in ambiguity; they use it as pretense for why they're not violating the agreement. They say something like this,
"Well, we never clarified that… if you had told me that I would've changed my bid completely."
"You’ve changed a lot of things on me, so I had to spend more money and now I can't finish this job unless you pay another $2,000.”
They love ambiguity so you need to be extremely specific when hammering out the details. If you're not, it's going to hurt you down the road. Now, let’s be realistic. You are hiring someone because you can’t do it yourself. So how do you be specific about something you don't understand? Well, you can be specific on the results. You need to use phrases like this,
"So that there's no misunderstanding, who will haul away all of the debris and junk created from the job? Are you the one getting the dumpster and coordinating with the dumpster company? Are you the one that's going to haul that away and do a final cleanup?"
“The job will be finished when I walk around, and everything's touched up and I can tell that there isn't touch up here and touch up there. Is that right? Okay, great. I just don't want to have any misunderstandings."
I'm not going to blame contractors for thriving in ambiguity. You are the one that needs to make sure you clearly articulate exactly what the deal is. It's about the specificity of those milestones so that it's crystal clear and there's no confusion on what it is that they're supposed to do and when they’re supposed to do it.
If you have a strategic installment tied to specific milestones and are extremely specific, what else do you need? Accountability. Everyone does better when they’re held accountable. If you’ve built your deal using the first two components, there's only thing contractors can do and that is to change the deal. An example of how they might do that is to try to get you to pay before they have completed a milestone due to illness, divorce or any other story that tugs on your heart strings. Your answer needs to be kind but resolute.
"I am going to stick to our agreement. I'm going to follow through with my commitments and pay you exactly when those milestones are reached. You can count on me. But I'm not going to change the deal that we've already established. In the past, when I have changed or bent my rules, I've always paid for it. So, it's nothing against you personally. And I don't blame you for asking, but no, we're going to stick to the deal."
When you change the rules there are always unintended consequences. You need to be accountable for the agreement you set without being obnoxious. Walk through and inspect the property to ensure the contractor has met those milestones. If they haven't, you can be respectful and kind about it, but don't pay the payments until it's finished.
Justin Barton says
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Milot Noel says
That is really helpful thank you Phil for your sharing God blessed
Thanks Phil for the useful information. It’s just two weeks I had issues with a carpenter to replace three doors. I had paid him one payment out three installments One of the installments was with him as I had provided service to him and was unable to finish.
He has not finished the work yet coming up with excuses three times and it’s three weeks past the deadline. I’ve asked him to refund the money and then I can find another carpenter.
Thanks for your videos and the first book to read on real estate was your book in 2017-How to be a real estate investor.
Greetings from Tanzania!
Max Machnik says
Always great videos with street smart wisdom.
Ted Spenadel says
Excellent video, Phil