Electrical Connection Winter 2015

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it signed off by the client. I am amazed
at how few contractors insist on getting
Mrs Jones’ written approval before doing
variations. It must be because she is just
so nice.
> Always try to get to a firm price. If this
is not possible then agree on a rate or a
‘capped value’.
> Avoid ‘do and charge’ methods for
domestic variations. Your client will
always underestimate what it costs, so
get it on paper beforehand.
> Each month, somewhere on your invoice
or claim, note the value of the initial
quote or budget and then show the
current value of completed work. That
way you can say that your client was well
aware that the works had exceeded the
contract price. Many clients argue that
they had no idea that the work was a
variation, or that the contract sum had
been exceeded. You need to knock this
one on the head.
Variations will either make you more
money, or lose you everything. So
keep them under control and keep the
relationship ‘business-like’.
SCOPE OF WORK
Another typical cause of dispute is the
agreed scope. Too many contractors use
quotes that only vaguely describe the
work they have agreed to undertake for
the agreed price. This leads to your client
insisting that a whole pile of work that was
not in your scope, must be in your scope.
Because your quote was vague you feel
you need to accommodate the client and
do the extra work; and lose yourself money.
Avoid the issue by:
> Scoping your work in detail. Refer to
plans, measures, site locations, materials
etc. It must be easy to see exactly what it
is you are offering to do for the price.
> If there are any exclusions, then list them
in detail.
> If there are inclusions, then list them in
detail.
In this situation you must insist that any
additional request is a variation and do not
do it unless a variation is agreed.
DOCUMENTATION
Because Mrs Jones is so nice, you have
allowed your documentation to slip. You
have not made site diary notes, not issued
contract notices, not done reconciliations,
not adhered to the contract, not had
variations signed off, etc.
This is the cause of so many problems
that we need not name them all: Because
this is a problem in itself. Payment disputes
thrive on the big empty space where there
is no documentation. The dispute becomes
a ‘he said, she said’, and they are very hard
to win. This is especially true in tribunals
where these disputes are so often heard.
Unless you can prove something with
documentation, you are on the back foot.
Pull out your pen and write it down, or
type it up.
DEFECTS
For the past six months everything
has been fine. No complaints about
the work. But now that you are fighting
over payment all the work is suddenly
defective. This is very common. Defects
will continue to be the lever clients use to
withhold payment.
The best way to counter this is to offer to
have an independent inspector or expert
look at the work and write a report. Offer
that immediately. And make that offer in
writing. Many clients will reject the offer
and this immediately undermines their
credibility. Make the offer again in writing.
Call the Department of Fair Trading and
have the work inspected.
This is a powerful strategy for the
following reasons:
> First it immediately removes defects as
a threat. Clients assume you will be
scared by the threat of defects. So don’t
be. Hit it head on. Show them you are
not afraid of it.
> Second, if there are defects then they
are documented, valued and defined.
This means that your client cannot
argue later that the $3,000 worth of
defects are now $125,000, so it blocks
the issue from escalating.
> Third, in any future proceedings that
report will be great evidence to show
what was really defective and what it was
worth. It also shows that you were open
and proactive about defects straight
up. This adds great credibility to your
position in any formal proceedings.
> If there are defects, then it is easy for you
to rectify them and document that they
are rectified. Have your client sign of that
they are rectified. If the client refuses
then get the inspector back to sign off
that they are rectified. Now the problem
has vanished.
When it comes to domestic work tread
carefully with Mrs Jones. Keep things
formal and business like, and keep it all on
paper. Document the work thoroughly and
don’t give freebies and silly discounts.
Mrs Jones may seem nice, but a
remorseless angel of vengeance lurks just
below the surface.
You must remember that
Mrs Jones is your client. She is
not your friend.
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