President’s Letter – February 2016

JWoelfel_headshotChange order blues

It’s important in our industry to learn from our various experiences on our jobs. We are just finishing a very difficult job where we were asked to step in and supplement another tile contractor’s work on a hotel because the original tile contractor did not have the manpower to do the work on schedule.

All of the work we did was on a time-and-material basis and was done through signed change orders generated by our company and signed by the general contractor. We are now winding down the job and it’s time to reconcile all of the change orders, bill and get paid. I have been in negotiations for the last three weeks with the general contractor to have the last few change orders settled so that we can bill for the final amount.

This negotiation is causing me headaches. Why? Even though we have signed change orders for all of the work done – and have completed all the work – the general contractor is still negotiating my prices.

During our various industry meetings and shows I have had the opportunity to sit down with other tile contractors around the country and share similar experiences. Martin Howard of David Allen Company, NTCA 1st Vice-President, shared with me that I have to make sure the change orders are professional in nature and are signed BEFORE we do the work. Pretty elementary I know, but also very important. How many times have we tile contractors completed change order work, THEN put a piece of paper in front of the general contractor, who suddenly forgets their directive and hangs us out to dry?

Experience and networking has underscored the importance of making sure our documentation is professional, clear and signed before the work is done. But experience and networking has not prepared me for negotiating payment for change orders that are signed before we have done the work – this is a first. I see a few options:

1. I can hold my ground and convince the contractor to pay me for what I have done.

2. I can make a business decision and negotiate away some of my hard-earned money.

3. I can take a hard line and start filing liens and sending letters that will hurt feelings and destroy relationships.

To me, 3 is the nuclear option. Option 2 is like giving me fake cherry-flavored medicine – it leaves a bad taste in my mouth. Option 1 is my best choice. I must be professional, make lucid points and back them up with superior documentation. Plus, this meeting needs to take place in person and not on email or over the phone.

This article may be obvious to everyone reading it, but this situation arises almost every day during tile contracting. We as tile contractors need to handle this challenge in the most professional way possible, without damaging our relationships with our general contractors. However, sometimes, we may have to damage our relationships in order to get paid.

I do know one thing for sure, I will learn from this experience.

Respectfully, James

James Woelfel, NTCA president