How To Insure You Will Collect Money On Your Work Done On A Residential Project

Collecting money for work done on a residential project can be a nightmare at times if you approach the subject in an unprofessional manner.

There is nothing that should stand in your way to receive payments for work that is done pursuant to the project plans and specifications.

You just need to make sure you perform the work as a professional. Make sure all agreements are in writing. Do no extra work beyond what is called out in the plans and specifications without a written change order. Get a qualified third party to make periodic, critical inspections.

Let’s back up and discuss what I have already thrown out.

Contract and Specifications that dictate how the project must be completed:

  • These documents should be reviewed, initialed and dated to show they are the approved documents showing how the project is to be completed.
  • Depending upon the size of the project; you need to agree and include in the documents when and how the periodic payments will be made.
  • I recommend that a third qualified party be designated as the inspector for work done. If the project has a state, country, city or other building inspector; you could use their inspection reports and acceptance of the work to be acceptable to trigger the periodic payments.

Payments:

  • Depending upon the size of the project; you as the contractor, need to do your due diligence.
  • Do you know your customer?
  • How is the project going to be funded?
  • The materials should be paid upon delivery so you do not allow yourself to be stuck between the owner and your suppliers.
  • Have you ever considered using an escrow account to insure the money will be there when you need your next draw? This is something that you should consider!

Change Orders:

  • Absolutely do no work that deviates from the original plans and specifications without an approved change order.
  • Make sure the person authorizing the change in work has the authority to do so.
  • Make sure that the extra¬†funds¬†will be deposited and available.
  • Do not allow yourself to be exposed to doing the extra work without adding extra time to the completion date. This could hurt you if the owner decides to impose penalties because you did not meet the original completion date.

You need to make red lines to the original project plans that depict the extra work or provide plans in an agreed manner that shows the work that deviates from the original plans.

Documentation:

  • You need to document everything that happens on your project; make note everybody that sets foot on the job site while your company is in charge of the job site. Do not allow any unauthorized people to be on the property while you are in charge.
  • Make sure that the proper insurance is in place before beginning construction. This will protect you and the owner of the property.
  • The main thing you need to do is to make sure there are no misunderstandings throughout the completion of the project.

I have found that some people may become intimidated by the amount of paperwork and notifications that are sent but you need to insure everybody that you are only this to insure there are no misunderstandings and if anybody does not agree to the periodic reports they need to do so in writing so you can eliminate those misunderstandings before they become problems.

If you do the necessary paperwork you can eliminate most reasons for not being paid for work you have done on any project.

As long as you approach every project in a professional manner you should be able to receive your payments with no problems!

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