How do you make great content that connects with people, especially in the trades? How do you start out with content creation for your business? Join Podcast Host and Author, Jon Isaacson, as he discusses these points and more on this episode of Specified Growth Podcast!
Host Tats Nakagawa (CEO/Co-Founder at Castagra Products, Inc.) talks to experts from inside and outside the industry.
In this episode of Specified Growth Podcast, Tat's is joined by Jon Isaacson, a Restoration Operations Expert, Author, and Podcast Host. Jon talks about his background in the property restoration industry and how he got into content creation and podcasting. He discusses how to properly qualify opportunities and say no to the right things. Listeners will hear Tats and Jon discuss how they are leaning to create content that connects with people, and much more.
At the end of 2021 we formed the Fellowship of Construction Knowledge and Entrepreneurial Development with a simple idea, get local contractors together to connect, collaborate, and conquer on their shared challenges. Coming out of the shutdowns, many professionals expressed a desire to return to in-person gatherings for education and networking with their peers. We put the idea to the test and have proven this to be true.
Regular meetings occur the second Tuesday of every month and will resume in January of 2023. These meetings are primarily discussion based as business leaders shared that they enjoy bouncing ideas off and learning from their peers. Each meeting has a topic so that participants can come prepared to discuss and engage.
Prior discussions have included:
If you are a contractor or insurance professional in Washington State or the broader Pacific Northwest (PNW) we encourage you to join The FoCKED mailing list by filling out our interest form and check the calendar on our website regularly for updates - thedyojo.com/focked
On Episode 95 of The DYOJO Podcast we discussed A Tale of Two Contractor Litigation Scenarios.
These are two very different litigation experiences. We discuss some of the ways that they are similar and mostly the areas where they diverge. We highlight some of the important lessons contractors can learn from both scenarios.
Guest Whitney Wiseman, a contractor out of Palm Springs, Florida joins us to share his insights. He reminds his peers in property restoration, "We are a specialized trade in the construction industry. We all should act like contractors. We should be professional in our state as our state regulates us to. And we should utilize everything that is in our power in order to protect ourselves from a customer screwing us over."
Tale #1: RJ Construction v. AI School District
On prior episodes of The DYOJO podcast we've been talking about a case out of Texas. One of the local news broadcasts summarizes this litigation tale in this manner, "An Arlington construction company says it worked around the clock last February  to clean up a flooded school. Months later it says it has yet to be paid." This is in reference to Robert Jordan Construction (RJC) versus the Arlington Independent School District (AISD). In this case, Robert Jordan Construction responded to flooding after Winter Storm Uri hit the area in 2021.
RJC thought they had an agreement about the scope and the cost, but they discovered (or ignored) that was not the case. We've been unlocking as many of the pieces to that story as we've been able to find in the court documents and public records. So it's brought to light some questions, some teachable moments for contractors, especially for those who are new or newer to larger projects. On an insurance claim project like this one, there are multiple parties are involved. It's not just the customer, the insurance company, and the contractor.
Whitney Wiseman reminds contractors, "What we're talking about today, which I think is so important," is for all contractors to, "Do your job. Do your documentation. Be transparent. Be a stand up contractor. If you do those things, you shouldn't end up in a situation like homeboy did out in Texas."
Tale #2: Conway Construction v. City of Puyallup
Tale number two is a case that came across the desk here at The DYOJO Podcast. It's called Conway Construction versus the city of Puyallup. Some of you may recognize that is the town that I currently reside in. It's just outside of Tacoma, which is just South of Seattle in Washington State.
Are you aware that when a contract is terminated, there's two terms under which it can be terminated:
These distinctions are something that all contractors should be aware of and ensure they are addressed in their contracts. There needs to be specific language that outlines what happens if the customer finds a defect or is unhappy with the performance of the contractor. Language should include a description of the notification process as well as how the contractor will respond.
Usually the customer is responsible to notify the contractor of a defect in writing. The contractor will have X number of days to come up with a remedial plan that is agreeable to all parties. If the issue isn't resolved with the corrective actions, or if the parties can't come to agreement, then the contract explains how the process will proceed. One of the most important things any contractor and customer can do to avoid litigation is to agree on a process for how disagreements will be resolved. In the event that the worst happens, how will both parties terminate the agreement with the least amount of collateral damage?
If the customer is going to terminate the contract for cause, there is a process. Every contractor should have a conversation with their client explaining that if they believe there's something wrong with the project, the contractor has first rights to try to remedy the issue. A quality contractor wants to make things right. If this process is outlined in the contractual agreement but the customer doesn't follow that, as the City of Puyallup didn't follow their own contract, then they may surrender their default claim.
Most contracts can be terminated at will, or for convenience, as long as no bad will is in play. So a customer doesn't need a reason to kick a contractor off of a job but they will need to follow the termination for convenience process outlined in the contract. Especially, as was in the case of Conway v. Puyallup, if the customer was the one that drafted the contract terms.
This case reminds contractors and customers to be aware another item which is "the plain and ordinary meaning" of the words utilized in the contract. The Supreme Court of Washington emphasized when the contract terms are clear, the court will enforce it as written. As a contractor, it is important that a non-legal person can read and understand the contract.
Two Types of Contract Termination
Within the contract between Conway Construction and the City of Puyallup, it stated that a termination for convenience would entitle the contractor to greater damages than if it was terminated for cause. Under the agreement, a contractor terminated for convenience was entitled to be paid for all actual work performed until the date of termination. While the city terminated the contract claiming it was because of the contractors alleged breach of the agreement. When the trial judge reviewed the facts they ruled that the termination was not for cause.
Since the termination was not for cause, the contract terms converted the termination of Conway Construction to one for convenience. The Supreme Court of Washington ultimately affirmed that decision. The high court reached this conclusion simply by reviewing the plain language of the contract. The termination for cause could only be based on defective work if the contractor neglected or refused to correct rejected work. This mutual agreement further provided that upon 15 days written notice the contractor had to remedy the work to the satisfaction of the city.
If the reader has been following our review of RJC vs. AISD, they will note that the facts of this Conway case vary significantly from those outlined in the Robert Jordan court documents.
A contractor should document everything from the agreements that they make, the conversations that they have with any party to the project, and any essential communication related to defects, defaults, and remedies. A typical communication (or Comms) log, such as those we have recommended before on the podcast, might include:
The contractor in this case was able to document that it took steps to remedy the alleged defaults and reached out to the city to determine if the corrective efforts were sufficient. The city however, refused to meet with the contractor. The trial judge therefore found that the contractor was not neglecting or refusing to correct the defect and that the city's failure and refusal to meet with the contractor to discuss the remedial actions was unreasonable or made in bad faith which had the effect of making the termination one for convenience rather than one for cause.
The court stated their decision was thereby bound by the terms of the contract.
Customizing Construction Contracts
Regular listeners will remember Bebo Crain form our prior discussions regarding RJC v. AISD. Bebo believes, "You gotta
adapt your situation. Each project has different amounts of risk and the protections [in your contract] depend on the amount of risk. I recommend getting a lawyer that will sit down with you to write a contract for your situtaion. You write out the things that you have done wrong and identify those as your risks. As more risks come you will work with your attorney to add those to your contract. It can be an evolving contract. As you obtain more situations that you feel you might be entering risk and learn how to hedge that risk with your contract and your disclosures."
These two litigation scenarios remind contractors of a couple of key elements:
A contract is agreed to by both parties. In the RJC case one of the arguments is whether there ever was an agreement in place. In the Conway case, the contractor signed off on the process of default and made a good faith effort towards addressing the issues that the customer brought to their attention.
In the RJC case we shared a news clip that says the school district is asking for documentation that the contract says doesn't exist. In the Conway case the contractor documented their process all the way through the project. Their documentation was sufficient enough that it held up in court. Conway was able to show they were within the terms of the agreement.
According to court proceedings in the Conway case, the customer came to the contractor with the defect issue(s). Upon 15 days written notice the contractor had to remedy the work to the satisfaction of the city. The notice from the customer was to be in writing.
It is usually in everyone's best interest to attempt to settle a disagreement prior to going to court. In Conway, the contractor received notice, made the corrections, and documented their follow through. It is important to be able to present documentation of agreements, phone calls, emails, text messages, meetings, and any other form of communication with the client. The contractor showed:
The contractor can say, we understand the language of the contract, we did the right thing, because we followed through with the remedial action, and we documented our processes. The court read the agreement, saw the facts, and concluded that this termination was no longer for cause.
In this case the language of this contract was dictated by the city. This is often the case for government work, where the government entity presents the bidding terms as well as the terms of the agreement. The contractor should therefore carefully read their agreements, especially when the agreement is drafted by the other party, and understand all of its terms before signing. Then if the dispute arises, the contractor can use the plain language of the contract to argue in support of its position in the dispute.
Learning From Contractor Podcasts
From the feedback we have received on our podcast, contractors enjoy hearing other contractor's stories. It can be helpful to hear from someone else who has been there and done that. It is good for contractors to shorten their learning curve but they should understand that they cannot outsource or replace their learning curve. Gaining experience and adapting your operating procedures are critical to building a sustainable business.
Whitney Wiseman encourages restoration contractors to, "Reach outside of social media. Find individuals who excel in their space. Make sure that you learn as much as you possibly can from these individuals who are not trying to make money off of you and truly want to be your mentors." Mr. Wiseman paused during our discussion because he sees an issue. He says, "I see more mentors in our industry right now that want to make money off of everybody who's green, then I do individuals who are just willing to help. And to me, that's sad, because I came up in this industry where there were people who would answer their phone, give me the advice that I need, and it was free. But right now it's a weird world."
While Whitney advises that contractors are cautious with whom they trust, he also says, "There's a lot of people, though, that can really help you to be the best in the industry. Reach inside the industry for those people. But, when it comes to contracts, when it comes to business, when it comes to all these other things, get as far outside of this industry's mindset as you can and started attacking it as a professional. For instance, we [property restoration contractors and claims professionals] are a specialized trade in the construction industry. We all should act like contractors. We should be professional in our state as our state regulates us too. We should utilize everything that is in our power in order to protect ourselves from a customer screwing us over. At no point in time should we use these shortcuts in order to gain success because I can guarantee every single person the long road is worth it every single time versus the shortcuts. Learn from my mistakes."
Lesson Learned from Storm Response Workshop
If you would like to be in person with people that are experts in the industry that have years and years of experience, and are sharing their stories, join us Thursday, January 26, 2023. The DYOJO is traveling to Naples, Florida, for the Andrew Ask Building Science Symposium (aka Winter Break 2023). Andrew Ask runs Tuesday and Wednesday, then separate from that but at the same location, Pete Consigli and Jon Isaacson will be putting together a one day workshop titled Lessons Learned from Storm Response and Hurricane Recovery. Be there or be square.
Everyone who starts a business knows profitability is important, but too often contractors treat it as optional. This podcast goes along with a recent C&R article titled "The 4 Modes of Profitability for Contractors." It was the first in a series to attempt to help new entrepreneurs, in-progress contractors, and aspiring persons in a position of leadership to better grasp the essential nature of overhead and profit (O&P) within the skilled trades.
If a contractor charges for some level of overhead and profit (O&P) they will have a fighting chance every year and will be ahead of many of their competitors." - Jon Isaacson
In this episode of Restoration Today, Jon Isaacson, the author of the first article and orchestrator of the entire series, walks through how contractors can help themselves and their team members form better mindsets and habits as they think through the four modes of profitability for contractors.
The video and article discuss The 4 Modes of Profitabliy for Contractors:
This is the first in a series of articles; upcoming features in C&R Magazine will include input from Ben Justesen, Anthony Nelson, and Ed Cross. Ben will help contractors to understand their numbers and incorporate them into their true labor burden (Labor + O&P). Anthony will share his vast experience in tracking material, equipment, and other cost realities to more accurately incorporate these items into your estimating process (Materials + O&P). Ed Cross has some exciting news to share from the frontlines of overhead and profit collection. All of these concepts will help contractors to determine the appropriate markups (what you add) to achieve their margin (what you make) goals.
Jon Isaacson's best-selling book How To Suck Less At Estimating: Habits For Better Project Outcomes has been adapted into an internet course that is now available through Restoration Technical Institute.
Jon Isaacson hit the nail right on the head again with this one. So many tips for both "seasoned" and new estimating professionals. I thoroughly enjoy the fact that in all his books I find myself totally relating to his scenarios. Keep it up Jon! I cannot wait to see what books are to come.” - Lisa Atkins, reviewing the book
Construction Estimating Course
Features of the How To Suck Less At Estimating course:
Unlike any course you have ever taken before. If you like to be overstimulated, to learn, and estimating, this is the course for you! Jon Isaacson delivers practical knowledge and demonstrations in his signature "INFOtainment" style." - RTI course description
Insurance Claims Estimating Course
How to Suck Less At Estimating by Jon Isaacson
Description: Interactive eLearning Course
Duration: 6 Hours
The Six Modules of Habits For Better Project Outcomes:
LEARN MORE and register for this course at Restoration Technical Institute
When a contractor sends an invoice, is there an obligation for the receiver to pay it? The real answer is, it depends. In this article, we will review two scenarios, one personal and another from a case that is currently in litigation. After reviewing both incidents, contractors should have a better understanding of some of the self-inflicted ways that their claims for proper payment of services rendered can be harmed. This content will also serve as a simple training resource to help your team members shorten their learning curve for understanding three critical questions for getting paid as a contractor.
Three questions that will help contractors get paid
Often our ability to get paid suffers from self-inflicted harm. Unfortunately, I had to learn this the hard way following a surprise freeze event that hit our local market in Eugene, Oregon. We were hired by a property manager (some contractors already know where this is going), they even signed our work authorization (potential nail in the coffin number two), we performed the work, they signed our certificate of completion, and were happy with our work. Case closed, right?
What painful lesson did I have to learn? The property manager was not the owner of the property, nor were they authorized to sign contractual obligations on behalf of the owner, nor would they pay our invoice unless the owner agreed to release the funds to them or us directly. While it takes two to tango, the contractor has the most to lose so the contractor is responsible to protect themselves and their money. In this scenario, we failed to answer parts two (fully) and three (at all) of a critical sequence of questions for getting paid.
In my role as an estimator, there were some office politics and internal dynamics that made this situation more tenuous than it should have been. During the literal flood of freeze claims, I was covering the account of another project manager on our team. I was dispatching our team members based on third-hand verbal commitments. Several senior members in our office, including the general manager, my peer, and myself believed that since this was a large account in town, we could overlook certain processes. While it would have been good for our office to gain traction with their book of business our failure to complete the critical sequence of questions for getting paid made the process difficult.
Stop ignoring red flags as a contractor
If this scenario sounds familiar, perhaps you have been listening to a story we have been sharing on The DYOJO Podcast about an Arlington Texas contractor. Robert Jordan Construction (RJC) claims they have not been paid for services rendered at Sam Houston High School following water damage from Winter Storm Uri in 2021. RJC believed they had answered question one but the customer, Arlington Independent School District (AISD), disagrees. The court documents ask critical questions that many contractors, including myself, must answer, such as, “Do a series of emails constitute a contract or agreement?”
As we cover in the podcast, RJC performed a walk-through, stated a verbal scope of work, and proceeded with what they thought was authorization from the appropriate parties. RJC followed up with a (briefly) written proposal, the school district responded with requests for further information. Listen to these rebuttals from AISD and ask your team whether these should serve as warnings to review your processes and tighten up your contracts.
With regards to Question One, RJC proposed a scope of work and stated a price based upon a pricing structure, square footage pricing for water damage response and/or dehumidification. AISD states that the quantities, documentation, and pricing are inconsistent with the cost of work that they believe is appropriate. As for Question Two, it is documented that AISD appealed for more information as soon as they received the proposal from RJC as well as after they received the final invoice.
Question Three should have been cause for teh contractor to take their foot off the gas as early into the process RJC was notified that no amount over $50,000 can be authorized without approval by the AISD board. RJC was notified of the date on which this issue would be brought before the board. The board did vote, “To authorize Superintendent or his designee to negotiate a contract - in contract with RJ Construction for emergency services and equipment necessary to perform moisture mitigation of district facilities not to exceed $1,245,600.00.” By this point of further payment ambiguity, the work had been completed.
Learning from your mistakes as a contractor
As with my personal scenario, one could see RJC believing they are acting in good faith and trusting people on the other end to “do the right thing.” Yet, the red flags popped up early and appear to have been overlooked by the contractor. A few additional lessons many have had to learn, especially when working with governmental agencies, is to always assume that a third party will be called in to review the work. One of the many pieces we are still trying to put together in the podcast research is just how much documentation RJC did or did not provide the district. AISD appears to have asked for additional documentation early and in a much more directed manner after they consulted with their insurance carrier.
I shared some of my story on Episode 93 of The DYOJO Podcast as we continue to dig into the available information from the RJC vs. AISD case. If any of this resonates with you or your team, we would love to hear from you. Tune in on Thursdays and contact The DYOJO.
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