New Build - payment disbursement

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thadius65

LifeTime Supporter
Jul 30, 2011
440
Bloomsburg, PA
Hello,

(I hate curve balls).....

So we got all our selections completed, presented to the (3) builders, checked references and all clear on all. Selected one we felt most comfortable with (family owned, 30 years yadda yadda). Called today to indicate we are going with and to setup signature of contract. He then indicates money disbursement - $1,000 at contract and $1,000 at completion. All the rest day 1 when they start.

I know the answer to this, just looking for validation/support. This company has recently been handed over to Jr. from his father with past year. Their store frontage has gone form two stores (30 miles away from each other) to one store. He indicated he needed the big chunk at start due to him paying cash for product. These two things tell me he is either getting better discounts doing so, or this trend of smaller size and lower business has him on a cash only basis. Scary.....

My thoughts are if I cant get this to a fair three payment distribution (50, 30, 20 or 33,33,33, or ??) I am probably going to walk.

What all have you seen as the norm or what you did distribution wise? Overall thoughts?

Thanks,

Ted
 
I can't speak for the "norm", but for our situation, we were deciding between two builders and one had a 5 payment method (10, 30, 30, 20, 10) versus a heavier upfront plan (35, 40, 23, 2) of the other builder. We went with the 5 payment PB, and it wasn't the deciding factor in our choice, but it weighed pretty heavily on us. I really worried about not having much in reserve to ensure that the builder has the right motivation to finish all the final items....which we all know that the small items can add up ( a crack here, a discoloration there, etc.).

If it was me, and I felt like I had a good rapport with this PB, I'd ask to adjust the payment schedule and see what he says (can't hurt to ask). If he won't budge, then I would probably look at another builder. The way I look at it is that this is a huge sum of money and I want insurance that it's done correctly the first time and in a timely manner. If you pay everything up front, you drastically reduce your bargaining power in the relationship.
 
And check out Dalanlord's post (2nd post) from this topic:
http://www.troublefreepool.com/new-pool-san-antonio-tx-proposal-review-t37465.html

Dalandlord said:
Satx66, that sounds like one fabulous pool and all the details of the build are above my pay grade. I will also admit I have never had a complete pool built by one pool builder so I dont know what the typical draw schedule looks like.

That said I have a ton of experience with contractors and subcontractors and any contract that has only 5% of the money as a final payment makes me very nervous. And if you read carefully if just states plaster and not even completion. Suppose things get out of sequence and he plasters the pool before he pours the deck? Technically you would owe final payment before the job is completed. In my experience when they draw too much too early that is when things start going bad. Human nature is to go where the most money is. If your job has 5% comming and someone else is due a 40% draw soon they tend to focus on the big money and not the little. I'm not saying they don't come plaster, I'm just saying they tend to grab this 40% this week and yours next week, or the next or whatever. Heaven forbid, if something goes wrong and you need a lawyer, the first thing he will say is why did you agree to a small final payment. In this part of the country In a post Katrina environment contractors with no operating capital became an epidemic.

I'm not trying to make you nervous, this guy might be the best contractor in the world, i'm just a cover your *** kind of guy. All things are negotiable and you may be able to alter the draw schedule. And I would certainly want the last draw to be on completion.

The last thing is insurance. It may be different in state, as I live in Louisiana and when you here valid in 49 states we are the other 1. But what about workers comp? Here you would need it. If one of his emplyees or subs gets hurt and he doesn't have it, it may be a problem for you. And always have the insurance company fax you proof of insurance before you sign the contract. Don't just let the contractor give you a a copy or say "I renewed it, I just don't have a copy of the current proof." A good contractor who has all the proper insurance will be quick to prove it. If he is insulted you don't trust him that is a red flag.

Again I am not trying to be an alarmist I'm just saying a little prep now can help you sleep a lot better later.
Click to expand...
 
I would definitely walk unless the PB agrees to change his payment terms. The fact that one store has closed down is an indication that this company may be in financial trouble. It also sounds as if there may be a problem with their credit since they are paying cash for the everything. Maybe Jr. is not as good with money as Sr. was?

Sorry to sound so negative, but in my profession we deal with contractors all the time. I'm seeing more and more situations like this. They don't always have a good outcome.
 
thadius65 said:
Hello,

(I hate curve balls).....

So we got all our selections completed, presented to the (3) builders, checked references and all clear on all. Selected one we felt most comfortable with (family owned, 30 years yadda yadda). Called today to indicate we are going with and to setup signature of contract. He then indicates money disbursement - $1,000 at contract and $1,000 at completion. All the rest day 1 when they start.

I know the answer to this, just looking for validation/support. This company has recently been handed over to Jr. from his father with past year. Their store frontage has gone form two stores (30 miles away from each other) to one store. He indicated he needed the big chunk at start due to him paying cash for product. These two things tell me he is either getting better discounts doing so, or this trend of smaller size and lower business has him on a cash only basis. Scary.....

My thoughts are if I cant get this to a fair three payment distribution (50, 30, 20 or 33,33,33, or ??) I am probably going to walk.

What all have you seen as the norm or what you did distribution wise? Overall thoughts?

Thanks,

Ted
Click to expand...

Ted it's an indication he has no operating capital. And secondly he is essentially asking for his Profit and Overhead up front. If he would have you believe he is only going to make $1000 on the job and going to get paid at the end that means he thinks you are stupid.

The bottom line is in construction, stuff happens, it's a fact. The difference in a good outcome and a bad outcome is how they handle it when it does. If they don't have the operating capital to handle an unexpected problem that means you are depending on the probability of no problems at all. You don't want him asking you for the final draw half way through the job because he owes a sub extra money to handle a minor problem. No doubt he will already have spent his profit when it does.

There is just not any good for you that can come out of giving him all that money up front. And if he is getting virtually all the money the day he breaks ground, why does he need the $1k in advance? He wants to start spending his profit before he starts. As you can probably tell undercapitalized disorganized contractors and subs have worn out my last nerve in the last six years. I think I would walk away from him, even if he agrees to modify the schedule can he really handle it or will he be bugging you for money the whole time? That's the way some get you, a little at a time and before you know there isn't enough money left for them to finish the job. And if they can't finish it you can't either when they walk away. And don't forget the proof of insurance. It's your only recourse in the unlikely event of a catastrophic problem. Best of luck.
 
Hearing exactly as I felt. Two fold - terms not acceptable and secondly - even if adjusted, my concern of no credit / no operating capital is just as bad. I am in the process of working with #2 builder to adjust their pricing to #1's and his terms are more typical and comforting.

Thanks all!
 
You might want to have your attorney advise you on the possibility of having the contractor provide a performance and/or a payment bond. It will cost extra, but it might be well worth the peace of mind.
 
Well Thadius, the curve ball wasn't hat bad, you hit it out the park. If you haven't done it already, you might want to post your specs and let some of these smart guys that k ow a lot more about pools than me take a look at them. Just incase you forget a detail here or there. I can't help with that part but glad to helP where I can. Take care
 

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Dalandlord said:
Well Thadius, the curve ball wasn't hat bad, you hit it out the park. If you haven't done it already, you might want to post your specs and let some of these smart guys that k ow a lot more about pools than me take a look at them. Just incase you forget a detail here or there. I can't help with that part but glad to helP where I can. Take care
Click to expand...

Dalandlord - Here it goes:

****************************
Pool - 18x36 Mountain Pond (your measurements slightly different)
Chemical starter kit, test kit, bug net, solar cover, etc
All excavation, concrete collar, etc.
panels w/ deck supports
20mil Liner
traditional dry pack on walls, poured deep-end and shallow end bottoms
Hayward SP2607X102S (dual speed)
S-244T Filter w/sand
Lader - w/ salt fittings
8' - 4 step curved steps with hand rail (w/ salt fittings) - note outside white, not inside vinyl covered due to golden retrievers
1.5" plumbing
2 bottom drains
2 Skimmers
2 returns
Hayward CL4-0 Color Logic (SP0527LED50)
Hayward Salt System (PL-Plus, T-Cell-15, AQQL2-POD, AQL2-Base-RF)
PL-Plus (aqua plus) automation connected to pump, heater, salt and light
Loop Loc cover and install
Gravel back-fill
5x5x5x5 concrete (curved to pool shape) w/ multiple umbrella fittings
Hayward Nat Gas Heater H400 ($2500 deduct if not wanted)
Fence 6' priv (per drawing w/ 1-8' gate and 2-4' gates) with back either pool code or shaped 4'-5’ - total is 215' white
First Winterization
Backfill removal - Behind borough building, they will allow dumping
Final grading of area impacted (to include fill of pond for concrete deck)
Removal of stumps in pool and fence area with backhoe

$36,400 - Total

** Additional Concrete - $6 per sq ft (not included in total price) - Approximately 850sq feet extra needed
********************************************

Any tips, please let me know. FYI - Central PA

Thanks!

Ted
 
Thad, my initial impression is that you don't have 1/2 the returns you should. Also, lets talk about plumbing - are the 2 skimmers on separate lines, are the 2 MDs on their own line - with only 2 returns do they each have their own line? (and separate lines need valves at the pad to control the flow through any one of them)

If a "Mountain Pond" is like the 'mountain lake' pools I've built - 2 returns aren't nearly enough to keep debris from collecting in the 'low flow' spots :(

Any chance of a pic of the proposed layout?

FWIW - I fully agree with the 'wrongness' of any proposal that doesn't have a <10% final payment - which shouldn't be paid until you've used the pool for at least a month after ALL the work is completed :wink:
 
waste said:
Thad, my initial impression is that you don't have 1/2 the returns you should. Also, lets talk about plumbing - are the 2 skimmers on separate lines, are the 2 MDs on their own line - with only 2 returns do they each have their own line? (and separate lines need valves at the pad to control the flow through any one of them)

If a "Mountain Pond" is like the 'mountain lake' pools I've built - 2 returns aren't nearly enough to keep debris from collecting in the 'low flow' spots :(

Any chance of a pic of the proposed layout?

FWIW - I fully agree with the 'wrongness' of any proposal that doesn't have a <10% final payment - which shouldn't be paid until you've used the pool for at least a month after ALL the work is completed :wink:
Click to expand...

Here are the plans:

Scan_Pic0008.jpg


Thanks,

Ted
 
fyton2v said:
If you haven't already... go with plan B. Trying to figure out a way to make it work with this is is a risk only YOU are taking. It's not worth it.
Click to expand...

Plan B has been in motion. Getting #2 PB to do all that #1 was going to do, at the same or close to same price, but with the comfort of fair disbursement of funds. They also have quality work and happy customers, so if it works... no problems.
 
PB #1 called today all surprised about my concern of the 99.999% up front. "We have always done this"... I told him that was not something I was comfortable with and would need to let him know Monday. I did this because I was to meet with PB #2 to get particulars later on in the day. Met with PB#2 and all is good. Same price for all same product. Handshake, Sept 12th start date and contract signing Monday evening.
 

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