Stop getting screwed on construction projects

2/23/2023

Who is at fault if a "client" signs a contract (or work authorization) but they have no authority or ability to pay?

It only takes getting left holding the bag once for a contractor to realize that there are two critical questions for every construction project:

Do you have the authority to sign my contract?
If the answer to the first question is "yes", do you have authority and access to the funds to pay me for the agreed-upon cost of my contract?

On Episode 98 of The DYOJO Podcast, we wrap up a review of an insurance claim from Winter Storm Uri where the contract had to sue the customer, a school district, as they believed they were not paid correctly for their water damage emergency services.

In this video, Bebo Crain and host Jon Isaacson discuss some of the hard lessons learned from being put in awkward positions with customers who either didn't understand the contract or misrepresented their authority to enter into one on behalf of the damaged property. As Bebo says, the simple the agreement, the better. Or even clearer, "The more understood, the better," for all parties involved.

Listen to the rest of Episode 98 or read The DYOJO blog. The DYOJO Podcast - helping contractors shorten their DANG learning curve.

Do you have the authority to sign my contract? If they say yeah, sure. Okay. Do you have the authority to initial or initiate payment? You can sign my work off, but your Are you going to pay? Are you the one that's going to pay? I think those are two really important questions.

Two critical questions for every construction project

RANSCRIPT:

Jon Isaacson (DYOJO): Two really important questions you can sign my work off, but are you the one that's going to pay you a mentor to do do a podcast?

I don't know about you Bebo, but I've done jobs like that, where you arrive, it's a big client, well known in the community, you know, like a school district, the teams jazzed to be doing something that's helping you really feel is a good cause we're working to get kids back into school, right? There's, there's nothing cooler than that. That's everybody's like, you know, I'm not excited to be working overtime, or overnight, or 24 hours or whatever. But because we're doing something good for our community, people feel a lot better about that.

Bebo Crain (BC): During that Texas event, Texas was hit with a massive winter storm temperatures dropped below freezing for days, there was heavy emotion in the air, and you add that, then we don't experience stuff like that. And so we got hit really hard in Arkansas. And it was, I'm telling you, like in a situation like that, I mean, if we could help out, we're going to.

I've dealt with larger entities like HOAs apartment complexes that have management shields in front of them, and things like that. And when you deal with an entity, or any property that you're gonna go on, I think that it's very important to understand who has control that property, who has control that property has control the property.

Or better or better yet, who doesn't have control of that property, talk to call. For the event, or the money that's allocated for that property, it's important to know that they can, they could withhold that information from us and make it seem like a property management company or superintendent has the authority to appropriate $1.4 million, without even knowing it's gonna be 1.4 million in the beginning.

I think it's very important for our contract contractor to have a contract and not just a contract, one that is clear with its terms, one that can be understood, like, you gotta be able to take your contract. And you got to be able to sit it down in front of three or four people after the fact that all this stuff's happened, right? Whether after you've done the considerations of the work for the money, and you've got to sit there and you've got to be able to explain it what happened, you got to demonstrate what happens and what's going on. It's got to be agreed upon, like, I agree to do this for this, you know, if something's going on, the simpler, the better. Or the more understood, the better.

DYOJO: Just asking somebody, do you have the authority to sign my contract? If they say yeah, sure. Okay. Do you have the authority to initial or initiate payment? You can sign my work off, but your Are you going to pay? Are you the one that's going to pay? I think those are two really important questions.