As he sat down across from me, I asked Josh “how have things been going this past month?”
“Last week I submitted the fourth bid to a client who has an incomplete set of plans and is not clear on exactly what they want. This whole thing of helping people figure out what they want to design, and what it will take to build it, while simultaneously asking me to bid and re-bid, and NOT getting paid for it is making us crazy!”
“What about instituting pre-construction agreements as part of your process of project development?” I asked. “Easier said than done!” he exclaimed.
While I can completely appreciate that making a change like this in your business can take time, it’s one that I’ve seen can make a HUGE difference in the overall success of your projects AND profitability of your company.
It was about a week after Josh and I’d had that conversation that I met my blog guest, David Davison of Realty Restoration, Inc. David has a completely different perspective on doing pre-construction agreements and has been HUGELY successful in implementing them in his design-build firm.
In this video, David shares how he navigates this conversation with the client, and how he justifies the costs in a practical and grounded way.
To help you implement pre-construction services, David was generous enough to share with us the Pre-Construction Agreement Realty Restoration, Inc. uses in their business. A super generous offer – thank you David!
I hope you’ve found this video to be helpful in your leadership journey. If so, please share it with a friend?
If you have other thoughts on the topic, I’d love for you to share them below.
p.s. In this week’s blog, my guest David Davidson with Realty Restoration, Inc., shares with you how to charge for pre-construction services so you can start making projects run more smoothly and be more profitable too!
p.p.s. David generously shared with us the Pre-Construction Agreement they use so you can implement this into your business too!
Vicki Suiter helps people see their businesses differently, then gives them the tools to do things differently. Since beginning her business in 1990, Vicki has helped hundreds of contractors achieve the kind of success they never dreamed possible. Today, in addition to consulting, Vicki is an in-demand speaker at industry conferences nationally and internationally. Vicki’s articles and opinions have been widely shared in print and across the web. She is also the author of the book “The Profit Bleed” How managing margin can save your contracting business.
I started charging for pre-construction services quite a while back. There are so many reasons to do that. I used to do a pre-construction contract that was separate from my construction contract.
However I have changed that to add the pre-construction services right into negotiating and talking about my construction contract all at the same time. I take a big retainer up front usually 20 to $30,000 for the type of projects that I do and I work off of that until we start the project or I eat through it all and have to send him another invoice.
Then once the project is started and underway we already have a construction contract in place. They’ve already seen my invoicing and billing system and process and our comfortable with me and all of that uncomfortable contract negotiation is way behind us.
Now I will say there is always a little bit of discussion just to get people comfortable with you and maybe comfortable with your process and maybe even rough ballpark ideas of numbers and that can be done hopefully in just a few hours or a few meetings. After that we’re on the clock and charging by the hour. I charge $125 an hour for my time currently and will probably increase that very soon.
Most of these ideas came from you and your time consulting with me so I give you a lot of the credit to giving me the notion that I deserve to be paid for my valuable time. Thankfully the market has been strong enough to support that type of thinking.
I just wanted to share my thoughts with you and thank you again for all of your help and support in the past.
Thank you so much Bill for sharing your experience – nice job on working through this with your clients and figuring out a way to get paid for all the work you put in at the front end that supports the overall success of projects. I support you in raising your fees as well – that is low for the area your in. It’s a delight to hear that the work we’ve done is together is still bearing fruit! 🙂