Duayne : Hello! We’re back with Day 3 of our Winning Week Challenge. I’m Duayne.
Amelia : And I’m Amelia.
When we first started Live Life Build, one of the first things we did was present a live workshop to a group of builders on behalf of James Hardie, and Bretts Trade and Hardware.
In a room full of 40 or so builders, we asked this question:
“How many of you have read your building contract that you’re signing with clients”.
Can you guess how many builders put up their hands?
It was only about a third of the room. Only a third of the builders there had read their contract from cover to cover.
Duayne : As a builder, I’m really familiar with this. I know that when I was doing it tough, and really not enjoying my business, or the way I worked with my clients, the contract was this legal document I just had to use and deal with.
Each time I set one up for a project, I’d just go through and fill out the relevant areas, without really knowing or checking what it really meant, or how to best use this contract in my projects.
Amelia : In the work I do in teaching homeowners, this is what they often think about their building contract.
They also see it as a legal agreement everyone has to deal with, that can seem a bit overwhelming with all its jargon and information.
They believe it to be a standard document, created by industry associations, and so they expect that someone is protecting everyone involved, and don’t realise it can have special conditions or things amended in it.
They see that the building contract is your promise, as a builder, to them. They see that it obligates you far more than it obligates them.
And whilst it’s becoming more common for homeowners to get their own independent legal advice on their building contract, so many are still entering into it without any review or checks.
Duayne : And it’s clear from when we asked builders, and the work we do with builders now, how often builders don’t read their own contracts, understand them legally, or get the right advice on them to ensure they understand what they’re using in their projects and business.
Given that the contract is a legal agreement between you, the builder, and your client, and it can be worth thousands and even millions of dollars, it’s essential that you:
- Understand what’s in it
- Know how to use it
- And are able to educate your clients about it as well
This may seem overwhelming at first. But don’t let that stop you. Because this is the thing to understand. If you’re like most builders we work with, you’ll find that when you read through your contract, you’ll discover it’s a rule book for how your projects need to run, and what you and your clients’ responsibilities are as you follow the contract during a project.
Amelia : The definitions section of your contract will be particularly helpful with this. You’ll see, and be able to show your clients, how a variation needs to happen, and what extensions of time mean.
Far too often, builders are in breach of contract without even realising, and if things go pear-shaped on a project, that can get you into a world of trouble.
When you understand what the contract means and involves, and you educate your client about that too, you can both be on the same page. You can manage their expectations, and you can use the contract as a tool to explain why things need to go a certain way.
Duayne : So, this is what we want you to do today, for Day 3 of your Winning Week Challenge.
Take some time to read through your contract. Read it through thoroughly from start to finish.
Read through the definitions as well.
Have a look at where you have been leaving things to the default suggested in the contract. One big area we see builders get caught out is in their liquidated damages and margins and leaving it to the default.
Also look at where you have NOT been following the contract for executing things like variations and extensions of time.
Make a note of anything you don’t understand. Note what legal questions you have, and where things don’t make sense to you.
Make a note of where you want to consider changing things, or where adding special conditions that would help your jobs run more smoothly, how the contract can help get you paid more frequently, and also how it can help a client understand how things need to run.
Amelia : And that’s it for our Day 3! Just a bit of reading for you!
Check the notes below where we share an easy win for you for your Wednesday Workflow, and ways you can next level this day of the Winning Week Challenge.
We’ve also got a link to your Winning Week worksheet. And, there’s some more information and resources if you want to dive deeper.
Duayne : We’ll see you tomorrow for Day 4 of our Winning Week Challenge.
