bad contractors

[murdock]

i was listening to ECR this morning and heard about this...it is people like ashley arumugan who give us contractors a bad name and make i t difficult for us to request a deposit.

considering he has already been paid 90 % of the value ofht the quote over R130 000 into his bank account...this person should have to return the money so they can get a reputable company to complete the job which has a supervised team to complete the project.

i also blame the owner for paying over 90 % of the money and you can see that the job only look about 40 % complete.

i have thought of started a bussiness where we open a account like they do for lawyers where the money id kept by an independent company and paid out on proof of progress to the contractor...the customer would pay the full amount into the independent account and i would first check the progress before paying the contractor...this way the contractor knows the customer can afford to do the job and the customer knows the money is safe until the contract is completed...its a win win situation unless i run away with the money...which i wouldnt be able to do because it would require 3 siginitures to release any money from the account


http://www.ecr.co.za/kagiso/content/...-go-swimmingly

[Dave A]

It's actually a damn good idea.

[AndyD]

We work on projects where the architect or consultant acts as escrow. We get stage payments as soon as that stage is handed over or signed off and it's from the consultant or architect with money the customer has paid in advance.

[murdock]

i am thinking of the smaller projects R20 000 - R200 000...where there are not architects and consultants involved.

[AndyD]

With small jobs around the R20000.00 mark, the cost of having an independent company holding and distributing money from escrow would probably be too high to be viable.
From the customers point of view I don't see this kite flying too well. If they control the payment if and when the mood takes them, they're holding all the aces. Why would they want to lose this position and incur extra costs to involve a third party to handle payments? Only on larger projects where authorising, making and tracking payments is a full time job in itself do they have any motivation to go that route.

[murdock]

i think there are more problems with this price range...i have heard of many a person being taken for a ride by the contractor...and builder not paying sub contractors...and customers not paying contractors... in this contract range 20 - 200...more so than higher contracts...i am just talking from experiences with smaller contracts...as you have mentioned the bigger contracts have everything in place like consultants etc...the bigger contracts i have been involved in...where they run into the millions we havent had payment issues maybe because all my contracts have been completed well withing the time frame...so we have never run into penalties either.

[Dave A]

i think there are more problems with this price range...i have heard of many a person being taken for a ride by the contractor...and builder not paying sub contractors...and customers not paying contractors... in this contract range 20 - 200...more so than higher contracts...

You're spot on - at least in our neck of the woods. I've found the small construction works segment to be a nightmare for payments. I avoid it like the plague at the moment.

[Retha]

We are in property management and experience this problem all the time. The small contractor is too small to fund the project, so he needs a deposit - but paying that deposit is always a gamble as you never know whether you will see him again. On the other hand, contractors are having major problems with clients creating excuses not to pay, so even contractors that can afford to fund the work, requires the security of a deposit.
As we manage a trust account in terms of the EAAB, I have also thought along Murdock's lines, but also got stuck at:
1.0 What if the 3rd party is the crook and runs off with the money (not likely if that is his livelyhood and he is registered at a professional institute with control, but in spite of that attorneys and estate agents are defrauding clients all the time).
2.0 The costing aspect - how will you charge the contractor and the client? Percentage? Flat rate on the number of payouts? Perhaps a minimum of say R400 and then a percentage above a certain amount? I believe something can be worked out, but will anybody be prepared to pay for such a service?
3.0 How to deal with disputes? Who decides that the work the contractor did was in fact up to par? Some sort of dispute resolution will be required, however, the third party is going to be in the thick of it at all times and will the fee be able to make that worth his while?
So, after much thought I just gave up. If someone can come up with a solution that pays, perhaps he can get rich!

[murdock]

i havent put any thought into it yet as it came to mind as i was typing...as you mentioned there are just tooo many crooks out there..

but about who would decide if the work is up to standard...simple like the consultants who do it at the moment they pretty much have the say at the end of the day...they write the standards and enforce them...and only pay you once they are happy.

it would mean that a lot of the quotes which go around at the moment wouldnt be worth the paper they are written on...because one figue at the end would not cut it...a proper detailed quote with time frames would be a common practice...because this is one of the biggest issues with contractors in the industry at the moment and has been for as long as i can remember...they promise to finish in 2 months and 6 months later they are stil havent completed...shout yeah if you have found this to be true...this one mentioned in this thread is a good example.

why because they take the deposit and use it to complete exsisting projects they are busy on instead of paying for the project the deposit was paid for.

i have seen this on numerous sites...the contractors dumps piles of old wood and rubble on a site to make it look like they have purchased the material...then request a deposit...then you dont see them for weeks...because they use the money to pay wages for their staff to keep other projects going.

the customers are just as guilty when it comes to paying...i had an instance where the customer took a second bond to pay for the work we did...then instead of paying us...he purchased a brand new motor bike with the money....nobody got paid.

when i got chatting to his secretary...she told me he does it all the time...she has people phoning for outstanding money everyday...there should be a notice board for people like this where you can look up peoples names before you do work for them...

i normally check with other companies before i take on new customers...ask around if the person or company has a bad name...for example i was considering doing work for Grid construction because they are all over the place working...i was advised to be cautious...so i decided to stay away.

[Lyle Comyn]

I am a small contractor and will it not be worth having a "trusted or had no prob." info link to this forum that people can check out the good from the ass h**** that give the ind. such a bad name. This will also get more people on board.