Simple Tips for Avoiding Client Disputes
Running a residential construction business can be a challenge, especially when clients start to dispute costs. With the ever-changing economy and rising material and labour expenses, it’s not uncommon for clients to argue about the final bill. But, fear not! There are steps you can take to protect your business from these disputes.
Here are some simple tips to help you out:
Get Everything in Writing
When quoting and estimating, make sure you include everything in writing. Include every possible expense, such as material and labour costs, mark up materials by 10-25% due to their volatility, and add a contingency or provisional cost of 10-30% of the entire quote. This is to cover any additional costs that may arise, and ensure you’re protected.
Manage Cash Flow
Manage your cashflow effectively by invoicing promptly and chasing payments. Ensure you have enough funds to cover any expenses incurred during the project and plan for unexpected costs. Cash flow is crucial for the success of any business, so it’s important to keep a close eye on your finances.
Have a Payment Plan
Require a partial payment upfront to cover the cost of materials and labour before starting the job. This will help you cover any costs incurred before the project is complete.
Have a Disclaimer
Add a disclaimer to your quote stating that the quoted price is an approximation, and the actual cost may change after negotiation and finalisation. This ensures that the client understands that the quoted price may not be the final price, and any changes will be communicated in advance.
Discuss Job Variations
If a job variation arises during the project, discuss it with the client and get their agreement in writing before proceeding. This ensures that the client understands the additional costs and prevents any disputes about unexpected costs.
Document everything, including who was working on what and when, using a project management software. This ensures that you have a record of everything and can avoid any misunderstandings or disputes.
Take Photos of Work
Take photos of all work as it progresses, including any changes or variations to the original quote. This will provide evidence of the work completed and help you prove the work was done as quoted, in case of any disputes. It only takes a few seconds to take a photo, and it can save you a lot of headache in the future.
Keep Your Client Informed
Give your client verbal updates at the end of every week, even if they’re on-site while you’re working. Communication is key to making a client feel informed, and it also allows you to bring up any scope creep issues.
Running a residential construction business can be challenging, but protecting your business from disputes doesn’t have to be. Following these simple steps can help you ensure that you’re protected in case of a dispute, and give you peace of mind knowing that you’ve done everything you can to protect your business.
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