This MISTAKE Nearly Put me OUT of Business

[@ck907]

I too have been burned by the "tost of the Kyle". Great video! Loved the overlay with the gantt chart/project schedule.

[@jeffhall92]

tost of the Kyle will get you every time.

[@doubledarefan]

Kyle Toth reference❓ kzbin.info

[@colinstu]

what's a tost? who's kyle?

[@Weldinator]

So I'm not the only one that caught that...

[@VertigoGTI]

Kyle was an unreliable crew member, so I tost him. 'Tost of the Kyle' actually worked to my benefit.

[@danielshoop4928]

I'm a HVAC contractor and I don't deal with change orders often but let me tell you I'm changing my contract clause after watching this. Thank you

[@Richard-ff3zy]

Your best content yet. More on running a job vs quality of job

[@JWKDESIGN]

This applies 100% to the DESIGN side of building too. Detail your contracts and scope of work docs out to the nines, then be clear and quick on communicating changes. Thanks for making this!

[@CA.....]

Yes, I was going to write that as well. Design professionals need to get more adept at invoicing for changes, rather than absorbing them.

[@ModernMountainLiving]

I went way overboard to Help a family after a disaster. They felt cheated by the Insurance company and didn't pay. In court Judge asked why? She stated "I didn't feel like it". I do spec only now. More videos like this please. Thanks

[@GeorgeFrick]

As a software developer consultant, this video really rang true with me. We run into this in software projects all the time, and our industry is so young still. Lots to be learned by watching other industries, especially stuff like this video. Thanks for making it.

[@jobney]

6:37 I always find it funny when I do this. "Tost of the Cile". I'm glad it's not just me.

[@kirktruman6707]

Can I ask what that means I've never heard it

[@chrisz0619]

lol I thought that’s what I heard him say. Kirk, He’s saying “Cost of the tile”

[@2SanityAtitsBest2]

My dad spoke like that intentional a lot when I was young. Messed me up lor fife.

[@InsatiableMonkey]

I do this all the time. Source: my loving wife :)

[@paisaconstructiondavid1964]

Yes, absolutely true early and often. It is not personal it's business.

[@MaydaysCustomWoodworks]

I have an almost identical story in the cabinet making industry with my first high dollar client. I did about 100 linear ft of custom cabinets made out of maple and walnut. Raised panels. All the bells and whistles... I wanted to be the good guy and I did way too many "favors." My always saying "yes" gave me an impossible task, and I didnt want to upset the client so i worked 18 hour days and spent every dime i had and then some to try to make the client happy... In the end i lost money and the client hated me, and I'm not so fond of them either. I trusted them and didnt get anything in writing. It went bad... And it was because i was inexperienced in documenting our agreement of what I am being hired for, what they are paying for, what they are NOT paying for, and I was afraid to stop them and let them know up front that any changes would cost extra

[@bus6503]

A lot of guys can do the work but managing the work is a whole different beast. These kinds of videos are incredibly valuable.

[@russellnentwich8745]

Well said sir! I am learning the hard way as my business grows.

[@boxelder9167]

Russell Nentwich - One lesson I had to learn the hard way was always start with a higher estimate because then you have room to back off of it a bit. If you start too low the customer is never happy when the price has to go up. Also be cautious about who you give itemized bids to. I usually only do them on insurance claims. I have had customers trying to make me use drywall screws (they provided) to put backer board down because they are trying to save a couple dollars and noticed the screws I bought were expensive. The last guy I did an itemized bid for (I don’t know why I even gave him one) he spent 3 weeks going back and forth trying to get the price down by eliminating things that I finally told him I was too busy and couldn’t do his project. The final straw was when he said he could save money by doing the electrical himself if I could show him how to do it. Know when to walk away. Customers who start like that, finish like that. Set the price you can comfortably do the job for and don’t let them monkey with it. Most times when I walk away because I am not renegotiating a perfectly good bid they call me back to do the job. Then you have the guys who’s brother looked at your bid and can do it for $50 cheaper. People like that have lots of friends just like themselves they will refer to you. Never do an at cost job for the little old church lady because she has 5000 friends who need a favor too and they will blow your phone up. I have heard customers in the other room bragging to their friends on the phone how they “got one over” on the contractor working on their house who was me. I also used to hear them cry because they are on a fixed income. I tell them I am on a fixed income too and it’s so bad my wife can’t even afford to keep me at home anymore. I did thousands of people favors but none of them showed up for any of my surgeries to help me out. There isn’t enough left of me to keep doing that.

[@tlcbuilders]

Early in my business endeavors I had a fellow businessman tell me the best advise I ever received for my business. It was so simple. "Profit is not a dirty word." At the time my naive response was "I know," but I really didn't fully grasp what he was saying. It wasn't until YEARS later when I had finally gotten my business in a consistent, profitable position that I finally truly understood what he meant. Fair and competitive pricing IS necessary, but you must be profitable to allow growth in your company. You can stay home and make nothing, and that's a better option than taking a job that is going to lose money. Thorough, complete, and concise estimating; good execution; good customer communication, including the need and reason for change orders; good, specific, and complete contracts; and proper application of markup = a good business that should be profitable. No matter what your customers tell you or make you think, PROFIT IS NOT A DIRTY WORD!

[@buildshow]

Totally. Yes

[@ryancoulter7681]

Matt I run into these types of issues all the time. My problem is that I usually under bid the change order and I don't think of the extra time it takes. This has killed me on many big jobs. Thank you for the advice!

[@edwardromero6007]

Bidding and estimate process Matt. That would be a nice video also. How to set a budget

[@kirktruman6707]

I could not agree more that would absolutely be good.

[@townsendliving9750]

I just had a post in my Facebook memories today from a few years ago when I was still pretty new in business. "When you open a business you receive two bags. One is full of luck, the second one is empty. The trick is to fill the second bag with experience before the first one runs out". I'm 30 and have been in business for 5 years now. It's been a rough ass road, but I dont think I could ever go back working for someone else. I'm here now. I'm staying til the end, what ever the end may be.

[@buildshow]

Keep it up! Pray and ask for Gods help. Be honest and give your best to every job. Those are becoming more rare and you will stand out

[@matthewseabolt7342]

Couldn't agree with you more

[@MrSignSolutions]

That’s a great saying about the bags I’m going to have to remember it I started my business when I was about 30. 25 years later now and we have my 26 year old son working with us. Yeah you can stick it out .You never risk more than you’re willing to lose. Always try to keep customer service number 1, 2 and 3 of the rulebook. As well as filling the 2nd bag with experience, was true in my case and I still haven’t emptied the first bag.

[@jbssfelix]

Thanks for this informative video. I think a great follow-up would be one from the customer perspective on how to properly budget for a large construction/reno project to reduce the shock and anxiety of budget and scope creep as the project inches along.

[@ArthurDentZaphodBeeb]

Unless you're a very experienced client, expect a 20% contingency above your "whoa" price. If you are completely clueless, add 100%.

[@LVQ-so5th]

@@ArthurDentZaphodBeeb Or maybe the contractor could do their job and come up with an accurate estimate of cost. You're the experts, right? One thing that bothers me about so many of the comments here is the disrespect so many of you in the building profession have for your clients (you know... the people who are PAYING you and keeping you employed).

[@Conservator.]

Sooooo true. Just to add my 2 cents: If you don’t charge your client, even for small changes, they will think that you have a big (enough) margin so you can eat those changes. If you charge them fairly but for everything not within the budget, you’ll give them the impression that you’ve calculated your price with great precision and that you’ve got your things in order. They will not love you for change orders but they will understand. And if even remotely possible, I think you should give the customer the choice whether or not to take it. They rather choose themselves than have an extra cost forced upon them. Even if it’s a ‘no brainer’. It’s their money so let them decide.

[@tomim7187]

This hits a lot of us, it did me. Thanks for sharing! Very important information.

[@flydubs792]

Tom Im me too

[@itsJoshW]

The BEST part of this is that I work in IT, and this actually is relevant within other industries as well, NOT just within the 'building' community.

[@MrMerino52]

Josh, I also work in the IT field and agree with you. When I train new employees we spend a lot of time talking about "managing expectations" with the customer. Especially when it comes to tier1-1.5 support.

[@briancorboy1042]

Getting properly compensated for you work is universal. I tell people that the most expensive word in building is "just". When customers want to change what they are going to get, they have to realize that that changes the final invoice.

Same here also. IT business owner and same issue, great video.

[@o.o1858]

Project Management, Change Requests (CRs) , Enhancements , Bugs. That’s what you hear all the time.

[@jbossnack]

IT guy here too! Same situation here too...some clients change everything into a new project

[@spitzbuebe]

Thnx for covering contractural issues, like Change Orders. I’m an architect who owns a small design/build firm. The architecture & the construction come easy - running the business is the hard part. Good thing u mentioned the impact on schedule. Most Change Orders add time as well as $ to a contract. Clients need to know that in order to manage their expectations. I’ve had some jobs where the total value of all the Change Orders is higher than the original value of the contract. But more importantly, that can add months onto a job affecting other projects waiting in the pipeline. Once I lost a job because I had to push back a start date due to Change Orders on a current job. That was painful. I tell all my clients, the 5 most expensive words in any project are: While We Are At It. Clients changing their minds represent Change Orders for us. I think my record is 27 on one job.

[@brianwood876]

I've been doing repairs and remodels (mostly) in rural New England for 15 years and I dont know if it's just my area but the culture won't bear signed contracts etc... I know a lot of local builders and the "handshake" contracts are so ingrained that trying to get a signature will likely cost you the bid out of suspicion. I see all these guys on KZbin talking about charging for estimates and getting signatures and like here, change orders.... When run into something unexpected or the customer changes something, I just say: "that's going to cost 'x amount' more" and they say OK or nevermind.

[@rogergroover4971]

I loved your “tost to cile” comment. Really though your an amazing teacher and a wealth of knowledge, thank you so much for putting yourself out there like you do! I’ve learned so much as a homeowner from you! I’m not a builder or even in construction. I’ll keep watching and learning!

[@bangler62]

Right on Matt! Nothing keeps the client/builder relationship healthier than all contract parameters being in writing, up front, and well explained. Also, the happier you are as the builder, the better your work will be and the happier you will be able to keep your client. Regardless of how high or low tech a builder you are, contract detail and flexibility will make your client a better client and you a better builder.

[@publicprofile1]

I would like to hear more about your estimating process, and how you deal with potential new clients that are only shopping price. -Jake

[@jefflosey1561]

Price “only” Shoppers are loss/loss Jobs.

[@m8adam]

I'm a remodel estimator and we do rolling cost analysis on each project so we have reliable numbers to use for bidding. This allows us to get close with our 'preliminary' estimate without putting too many hours into it. I imagine you could invest some time in analyzing your costs over a few jobs and come up with similarly 'close' pricing that applies to your style of construction. Also, faulting potential clients for shopping around isn't really reasonable. Would you buy a new truck without checking comparable prices at a few dealers? For most people, home construction or remodeling are the biggest checks they will ever write in their lives; as their builder you should respect that and encourage their due diligence.

[@almas7123]

Anonymous Person what’s your company name? I’d like to look you up. Anonymous?

[@MaydaysCustomWoodworks]

I'm a custom cabinet maker. Different but similar business. I am a 1 man shop specializing in one of a kind pieces. I think there is a lot more to the puzzle than the simple question of "how do i deal with price only shoppers?". Some people make a great living dealing with price only shoppers... Look at Walmart. Look at Home Depot and Ikea for their cabinetry and furniture. So... If thats your business model then thats fine. But its a tough one. Difficult to compete against those guys. My personal philosophy is that "price only" shoppers will never be for me. They arent bad clients... They just arent my clients... So how do I make lemonade from lemons? In my experience a successful client pitch takes 3 things. Trust, impression, and price. If any 1 of those 3 arent achieved then I usually wont get the job. They have to trust my character. They must be impressed with my skill and business, and they have to be able to afford me. The first 2 are most important. It's OK if they cant afford me. Because if They are impressed with me and trust me they will at least talk about me and recommend me to someone else who may potentially be able to afford me. Also, its possible they can't afford me for this particular job, but something down the road they might be able to, and if they are impressed and trust me they will come back when they know they want something nice even tho its expensive. But to do business this way you need to succeed at being top notch in your craft, and your reliability. You need to always under promise and over deliver. Give your clients beautiful products and even throw in something extra and special for them. If your client is a cop, throw in a hand crafted cutting board with a blue line in it. Something like that. Always be on time and make it a relief for your clients when they call you. They can know you will only hurt their bank account, but in every other way you are the hero.

[@Tyler-dn8wn]

Boy y’all just wait till next recession to hit. These oh I won’t take this client yeah sure. When you don’t have any business you’ll be clammering for clients

[@centurion1945]

Great advice In addition to making sure you pick up change orders when they first come up, make sure your contract scope is as detailed as possible before you even start work since this is drives what is and is not a change order. Make sure to list not only what you are including in your scope but what things you are excluding as well and expect to be done by others. Also make sure that the contract references whatever version of the plans you built your estimate off of because you could find yourself on the hook for additional work if revised plans come out at a later point.

[@LVQ-so5th]

From a client perspective (me), this is the best comment thus far.

[@eworks9828]

Great advice Matt, good of you to throw that out there as those type of issues can wreck a business quickly.

[@jbossnack]

Not to exceed or maximums...being a people pleaser...man those rough client jobs will make you rethink your approach...thanks Matt for being so honest with important information that contractors need to know

[@eeol777]

From the prospective of being a possible client of a builder, the broad definition of reasons for a change order means the builder is virtually protected from any cost overrun. Is the builder properly supervising his workers? Is he and his subcontractors knowledgeable about code requirements? What is the guarantee that the builder offers? Are there independent inspections of the building during various stages of construction that must be passed? Some builders have special 'relationships' with code inspectors who may let some code violations slide. Builders have many subcontractors any one of whom, can place a mechanics lien on a property if there is a dispute between the builder and the subcontractor. At the end of the day it comes down to having integrity for the client and the builder. I do think builders need some skin in the game or they might not be as responsible as they should be. Independent inspection would go a long way toward making the client feel they were getting the quality they are paying for.

[@jay-rus4437]

EXCELLENT advice. Ive been doing construction management, and now 5 year business owner, for well over 20 years. This advice is spot on. I have made the exact same mistakes. Not at that level of loss, but loss nonetheless. As you said, in our efforts to please the clients, which is important, we can actually ruin relationships by delaying the importance of communicating changes.

[@stevengee4562]

hI Matt been in this game nearly 40 years and this video really hit a nerve,it was a good and honest presentation and bang on point, iv done the very same thing countless times trying to be a people pleaser, its not worth it if you have to lose out...buisness is buisnesss at the end of the day and if your a genuine and honest guy your clients should trust in that and be willing to swallow the extra burden to their budget....after all its for them right!....great video

[@kingmuppet7023]

We would also do a zero cost change order just to update details and show value on the project.

[@smartchip]

Sir, I am grateful for the advise, making mistakes is acceptable with due diligence, but, helping people not to make the same mistakes, is priceless,

[@geoffreyreeks2422]

I agree. In Australia, we call "Change Orders" "Variations". You can change a profitable project into an unprofitable project by mismanaging the variations and you can change an unprofitable project into a profitable project by managing well variations. Regards, Geoff. Reeks Builder

[@deivclayton]

Outstanding video! As an architect, I face similar issues with clients not understanding that changes cost money. If I don't get them to sign off on schematic plans and train them that changes beyond that point will cost them, then I've already lost money on the job. Keep up the great work educating the public!

[@davidcrawford1402]

Honestly, these are the kind of "Sage advice" kind of videos that I value most and end up coming back to view later.

[@capefalconkayak]

Been following your channel for a while now, so much good stuff. I'm a boatbuilder who happens to build a structure every few years and it's really neat to have KZbin as a resource these days. I've already put a ton of your tips into the latest little house I'm making (love those 5 degree window cripples, way better than a sloped block). Anyway, great stuff, super cool to see behind the scenes stuff like this, you come off as super competent so please, share those boneheaded mistakes, it helps the rest of us to avoid them!

[@mtg6753]

Thanks Matt, great advice on change orders. I am an engineer and this video is applicable to our whole industry with respect to management of a project. Looking forward to seeing your next video.

[@jamesrempel8522]

I'm an automation contractor and find this advice very useful as well.

[@davidcardinal9900]

Great video! Agreed about the change orders. When we do changes in the field, before starting we get a Change Order Directive, which can be a short hand written note that the owner agrees a change order is comming.

[@MrThedocholiday]

Really appreciate hearing about the business side of your vocation & not only the trade side. I was a successful contractor in CA for 20 years & love talking about how to run a business, but rarely do I hear business owners sharing or even having wisdom from their experience. Good job & thanks for sharing the upload.

[@timothybetts8840]

Matt. This comment is old, but this vijayo just showed up in my KZbin. I've been watching you for a couple of years. This is the first time I've seen you stop schlepping product, like Bob Villa, and actually talk to contractors. Please keep it up. I'm not a rookie, I'm older than you, but we all need these reminders of what it takes to wear the pants in a real home builder/remodeler environment. As an encouragement, please follow up with how you handle allawances. If you are at a loss, I would be happy to help.

[@danielevans922]

Upfront conversation can often offset future problems. I go into as much detail at the beginning of the process and I find that helps with unseen situations that will arise

[@bradleybowden1981]

Hey Matt thanks for the video, I've been building for 20 yrs and the very same thing happened to me. Now I cover every avenue and most people don't understand, but this is our livelihood. Keep the videos coming.

[@passionfruitestate9691]

Thanks for adding this video Matt. As a future client for buildings to be constructed it not only gives me a view into what to expect from the builder but also additional questions to ask prospective construction partners.

[@zschudrowitz155]

As a homeowner it’d be great to hear more about this. At the very least I can see what good builders do vs paying for projects as I go thru life and learning the hard way.

[@InsiderCarpentry]

As a trim subcontractor, it would be great to here more about your processes on how you interact with your trim subs. How do you go about getting a price from the sub before the job starts? Do you provide a detailed scope of work? Does the trim sub do a trim walk through with you and the client before trim gets ordered? How do you manage any changes after the scope of work has started? Do you find that your subs assimilate to the builder trend system well? What are your pain points as a builder with a trim sub? What can a sub do better to stand apart and be the best sub?

[@buildshow]

Tons of good questions. Might make a good podcast episode! Most trim contractors work on my jobs at a T&M rate.

[@josephlacerra8433]

Excellent definition and overview of change orders. Thanks, Matt!

[@abrown10503]

Hi Matt, as a remodeler, I really appreciate the straight talk about how to avoid mistakes like this that can cost you not only money but reputation in the marketplace. Thanks for the tip.

[@smurph1153]

Great advice! I am going to buy that book. I just walked away from a 30K basement remodel because the customer wanted so much detail in the contract including cost of materials and labor for each phase of the project and that is really something that would only be a wiled guess. This was to be a bided project and not time and materials. They even went so far as to rewrite my contract to suit their needs and took out what I put in it to protect me. Hind sight being 20/20 there may have been a better way to deal with this customer as opposed to walking away from a 30K project. I will keep watching your videos for more advice. Thanks for sharing.

[@dereksammons8801]

Thanks Matt, I realize you made this video 2 months ago but I needed it today. I've had my own construction company for 7 years but my my wife and I relocated to a new state 6 months ago and I stepped into the role of builder. I'm educated and experienced in business but am currently taking on my first new construction, full home build. I've worked really hard to avoid change orders but the time has come. I've been pretty hard on myself over this as I take my work and my word extremely seriously. Thank you for the transparency. It really made a positive difference in my day and my world.

[@jimpeterson3633]

Matt, Great video. I agree with how important it is to keep up with our paper work and signed change orders before we do the work.

[@burgesskj]

Wow, that makes so much sense. I've done that kind of change process on large network projects, but never thought about the same thing happening in build construction too. Most of our customers are not computer companies, so we have to explain, justify, and document all changes. The Change Control process helps them understand where their money is going, just like you're describing for tile. Thanks for sharing.

[@jimdenham8354]

Matt , Thank you for a very important aspect of our business! Like you I too tried being the nice guy and avoided CO’s like the plaque! I am a small GC in the Florida panhandle that specializes in remodeling/ renovating 100 year old houses. You never know what you are getting into until you are knee deep in it ! Again thanks for some great videos I look forward to them every week. Sincerely, Jim Denham Four Winds Construction

[@paulchoate1]

I’ve been building for 25 years as well. Love your attitude. Very inspiring.

[@Isaacmantx]

I feel like this channels has changed from “hey here’s a cool product and/or proper way to do things” to straight up continuing education. Fantastic advice coming out!

[@thomasDLC]

I really liked this video. As a carpenter who is currently in the process of starting my own building company this is great information. Thanks Matt 👍

[@glycerinfarmer]

Excellent advice, Matt! This is a must view for any builder, architect, or client.

[@burrionkemp4031]

It takes one of these experiences to make sure it never happens again. My very first day in the business, my PM said to me " Dont ever do anything for free, it wont be appreciated, it will cost you money and the relationship in the long run." That was in 1998. We were fishing together a month ago and I told him that I tell that story to a lot of people over the years. He said, "so what are you doing today, learn anything?" I said no, I'm still doing things for free. His response, "me too". We are both pleasers, but you hit the nail on the head. EXPECTATIONS UP FRONT. You can be a pleaser without losing money, and the relationship between you and the client will remain strong. This happend to me as well, but I was lucky the client wrote me a check prior to closing. Have you done any videos on Cost Plus vs Straight price contracts? I prefer cost plus, and I do open book budget presentations prior to start, including bids if questioned. I sell trust and wanted to carry that through to final budget, but I will not start a home until all the numbers are finaled, no exceptions. Thoughts?

[@cptrestlesssteven6469]

Appreciate your candor and willingness to make the industry better.

[@spikedhats]

This is the kind of info no one else is giving. Thanks for everything.

[@Redpitbull44]

Great advice Matt! Like someone else said, this is an aspect of construction nobody really talks about except Stanley Genedek. GETTING CUSTOMERS TO PAY CAN BE A REAL PITA (even satisfied customers). I can affirm in my Roofing business, you must start with a solid contract and get customers used to paying for things as the process moves ahead. ALL add ons must be documented, signed approval by the customer and finances must be secured. Especially on insurance work. People get a fat check from the insurance company and get squirrely. Again, thanks for bringing this to light and keep up the good work. I love your content.

[@buildshow]

Appreciate that. Agreed

[@jerpetraitis6769]

Matt, that was spot on! This aspect of contracting has always been the most difficult and frustrating for me. I like how you detail exactly how the change order process should go. ‘Early and often’ is great advice. I think giving a homage order at the time of the contract is a brilliant suggestion. Thanks for putting this great advice out there!

[@tomtillman]

I just built a house for myself. I nickeled and dimed myself for 10's of thousands of dollars over what I had projected. How could you even come close to knowing what it is going to cost, unless you are building the same house over and over? It's amazing how the little stuff adds up. Great advice. Communication is Vital.

[@Mr.Anugraha]

Thank You for your great insight! Would be possible to do a video series from start to completion of a project if your client is cool with it? It doesn't have to be a tv show kind of a thing. Like starting when a client approaches you for a project or bidding for a project, cost estimation, contract negotiation, tracking progress, solving problems that come up (what does that meeting/ consultation look like), change orders, talk to workers from time to time as to what they are working on, etc... It does not have to be a regular program. Just following a project from start to finish. A thought.

[@buildshow]

I have thought about that and I’ve got a Build in the Fall that might be a good fit!

[@hoejunhaobernard9588]

Holy shit. Great advice! Exactly what is happening to me right now. Wish I saw this sooner😥

[@larryyoungquist6876]

I'm a client and not a builder. I can honestly say that I would've welcomed our builder to use change orders to document the financial changes to our budget. In fact, I would've appreciated it if he would've kept track of the costs on something other than the back of an envelope. We contracted a cost-plus house project. At each point where we were faced with a required or optional modification, we diligently asked, "What was the allowance?" or "What was budgeted for that?. At almost every point, we would choose the less costly option. And we'd record that in our own spreadsheet. Imagine our surprise when the builder said at the end, "Just authorize this last draw to transfer the remaining bank funds." Whoa. What about the accounting of our budget vs. cost? What about our elimination of several items from the budget? What about our direct payment of material that occurred? What about the return of the tile? He couldn't answer our questions because he didn't keep close track of the cost expenditures as they occurred. This was the second custom home that we had built and if I did a third (which I won't...), I would recommend finding a builder that is savvy on not just the building quality and workmanship but also look at his or her financial skills. As Matt said, his relationship with the client was damaged. And I regret that with our builder, the project ended on a less-than-cordial parting. I would've been so enormously happy if we would've used an online financial tracking system and could've presented us with documentation over the lifetime of the project. In hindsight, we needed a contractor like Matt. Live and learn.

[@stuntmanstu1]

Thank you Matt. I’m a builder in Ontario, Canada for over 13 years on my own and 25+ years experience total. 95% of my clients are absolutely amazing and understanding when it comes to what I call hidden issues with a given Reno or build plus changes that my clients ask for during the build. I’ve been pretty lacks at the paperwork for change orders and it bit me in the butt for the tune of $20,000.00 for one big addition and cottage Reno back in 2016. My wife is my best sound board and adviser and I should listen to her more often when it comes to re-visiting the original contract when a client will ask for something more in the build. I always want to walk away knowing that their completely happy with the workmanship ( whatever the project) but sometimes it goes south with the talk of more money with the rare client. I also strive to build the best and pretty good is never an option. But I’ve also never been good at discussing monetary issues where a client has their guard up about going deeper in their pockets. Matt, I’d like to know where you got that program that shows your contracts and change orders. Looks amazing! Like my uncle in Scotland who used to own a heating and air conditioning business told me about being a business owner, “ if it was easy, everyone would be doing it” Cheers Stuart.

[@buildshow]

That program is BuilderTrend. Appreciate the comments brother. We sound very alike.

[@downtubecrank103]

I'm not a builder, but I heard you say train the client. Great Advice. I too have been burnt by builders because of miss communication and no documentation. Really the handshake deals in construction just don't work, rife with misunderstandings. There are plenty of contractors out there with no business experience & just can't get a handle on a bid price. Really frustrating on the customer side. Anyway wonderful video I'll pass your channel along to my contractor associates maybe they can learn something and get a little more professional. Thanks

[@Alex.overseas]

Thanks Matt for sharing this! I branched out on my own last year and it's really been a trial by fire. More good than bad, but the little mistakes eat up the income. Please make more of these! I would love one on billing, tracking writeoffs, and keeping track of finances/expenses etc!

[@TexasBarndominiums]

Man, I learned this the hard way as well. Thanks for sharing Matt.

[@buildshow]

Thanks Eric!

[@danaparish1644]

Matt, a great video. I’m a homeowner and I appreciate the pointers you gave to your builders (believe it or not). It keeps both parties up to date and informed about the costs of changes and unforeseen expenses as they occur. If a contractor talks to me about a quote and doesn’t explain change orders, I pretty much ignore that contractor’s quote. Realistically you never know what’s behind a wall or under the ground until you get there! Keep up the good work.

[@Don.Challenger]

Yes, you break up the basement floor for a bathroom installation and there is Jimmy Hoffa - the schedule is shot change order.

[@probuilder961]

Good Video, good tips! I'm a stickler for change orders in my remodeling business. My contract reads "any changes must be accompanied by a change order signed by contractor and homeowner". Even if it's simply a color or style choice. The homeowner will often say, "oh, that's okay, I trust you" I tell them, "it's not about trust, it's so we're on the same page". They agree. I do like your suggestion about informing that the change could alter the schedule, I'm putting that in my contract wording right now + will give sample C.O. at contract signing! Another thing I do is keep track of little extras I do, (complimentary items) such as fixing a sticking door/lockset, replace an outlet that doesn't work, minor things that are just good will gestures and frankly, often make working on the job easier for me. I keep track just in case at the end of the job, the owner asks for a credit since I was able to re-use something, or something was easier or faster than expected for me, I just take out the list of comp. items, and all is well. I've only had to do this a couple of times in 25 yrs.

[@buildshow]

Love it! Glad o could help and love to hear your tips too

[@davidwood2081]

Thank you you hit my project right on the head not only time but money Really appreciate your Input

[@ouimetco]

Excellent video and sorry for your lose. I’m currently struggling through a new construction paint contract. full lacquer trim and doors finished and sprayed 2 months ago and the customer decided the color was a little off. Now dealing with a supplier not really wanting to cover it because the customer and supplier picked the color and customer agreed to it. Neither customer nor supplier want to cover additional costs for the repainting however supplier has agreed to limited coverage. I’m stuck in the middle with an extra months work and scheduling nightmare. This information, in advance, would have helped me greatly. Lesson learned similar to yours. Cheers richard

[@C001Silk]

I’m Not a builder but your comments really ties into my business as well thanks very much.

[@patty109109]

This advice is applicable to way more than remodeling. I’ve seen a lot of software projects with a fixed cost go very badly. Vendor ends up eating huge costs due to poor requirements documentation and inevitably ends up pushing whatever they can to just get final sign off.

[@buildersofarchitecture42]

Hey Matt, possibly your most engaging and best video yet, I learnt this lesson over and over, still fighting it. Please do more of these videos more in how you manage margins rather than passing just exact costs, that was long road for me to learn!

[@dr66ss396]

Great video! I'm often too nice and ultimately it hurts my bottom line. People don't understand how changes add to the cost not only by material, but more often labor and delays

[@timothymchugh6232]

Thanks, I’m working on my Michigan Builders License right now and hearing about the importance of using change orders and preparing your clients at time of initial contract is good advice.

[@thomasstephens1598]

Thank you Matt for putting this out! This the most important video I have ever seen and I say that from experience. I had that happen to me and I managed to brake even but I closed my business. I also had a friend go through it to but did far worse he lost everything so thanks again.

[@FiscalWoofer]

Thanks for sharing your these painful but really important learning experiences.

[@jeffj2495]

Thanks for your honesty Matt. This again shows how valuable your advice is, and we appreciate you sharing your years of experience.

[@junkdubious]

I like how your software manages projects using a pathing diagram, so can break down tasks in parallel, and find that critical path.

[@brumaaron]

As a small builder myself I'm glad you are gonna make more videos like this.You had a lot of good information and great for everyone to understand the ripple effect changes orders make.

[@bmwestmoreland]

I just experienced this on my first house going solo. Luckily I still made some money, but less than half of what I had originally planned for. Really cool of you to share this Matt. Honestly I'd love to see more videos on the business side of your operation. It's where I struggle most.

[@dwightcarter6334]

Love the management videos. Ive got some change orders I have been dragging my feet on. I'm getting them out to the client now!

[@tomcampbell4414]

Great video Matt! I had a similar experience with my moving company with a guaranteed maximum on the job and didn’t put enough ink to the bid and make change orders clear. They say “ink is cheap” for a reason

[@deadstick8863]

Great Video. These are things that Contractors and Owners need to know. And these are all items that need to be clearly spelled out in the contract. Or better yet, have the Owner hire an Architect. Part of what a good Architect does is explain all the ins and outs of the entire project process and the contracts and helps to guide their decisions and make the process smoother.

[@Archosphere]

I just like your style. Your passion for getting it right shows.

[@davidlamberson5435]

Matt, I am not a contractor or a builder but I am a very handy homeowner. I am interested in doing a quality modern rebuild/remodel on my modest Indiana home in an affordable fashion. 20 years ago I worked in painting and drywall and had a chance to watch and learn alot about new home construction. The homes we worked in were 500K to 3 million dollar homes in an gated community near Myrtle Beach. As painters and drywall hangers we got to look at the bones of a house before it got its final layers and finishes. Needless to say I saw some beautiful work by most builders and some really bad work by others. Considering the cost of the homes I expected perfection. Now to my point, I am a bit of a perfectionist when it comes to any work I do with my hands. Sadly I have Mercedes taste and a Ford pocket book. I am finally after years of planning doing a complete remodel on my house just shy of a gut job. Your video series on KZbin have helped me in design, material selection and construction planning. Your videos are nicely produced, easy to understand and follow. Just wanted to say thanks and remind you that not all of your viewers are professional builders but we still get a lot out of watching. THANKS MUCH KEEP UP THE GOOD WORK!

[@FuerstenbergE]

I just realized you only have 492k subscribers, I see this as going up much higher. Matt, continue teaching us about building science and I foresee your channel expanding greatly

[@ThisTall]

Would love to hear your take on how you think a relationship with a piecework installer should go. I’m a cabinet installer so I work for cabinet companies and not the builder directly. But my #1&2 issues with every cabinet shop I’ve installed for (at least 7 by now) is: 1. Sprinkling in the product during my scheduled time I’ve committed to so it dictates the order and pace I can install, ruining my rhythm and often doubles the time it would take me. 2. Sites that aren’t either ready for me, or prepared to have me there yet. -by this I mean at least 3x the sq/ft of the kitchen or other rooms getting cabinets in them cleared for me to work. I think 1 or both of these things are mostly the cabinet shops problem, but I’ve found many if not most builders have (as you say) “burnt through the fat” in their budget and schedule by the time the cabinet guy gets there. So they suddenly become unwilling to give me any space on the site from other trades, or even garbage or room to set up tools. Cabinets aren’t like flooring or painting. We don’t buy our product from a supplier and clad flat surfaces with them. My window to install may be 3-4 days, and 90% of the time I’ve been put off 2-3weeks by the builder already, who then makes no room for me on the site or in the schedule. It’s almost impossible to make a living this way sometimes because every 1 week job needs 2+ weeks in my schedule to be wide open for it, able to complete so I can get paid. And change orders or just extra charges are ALWAYS met with resistance if they’re not just a $100 here and there, when they may have cost me $1000+ in a month losing other work because a schedule is so impossible to keep. My question for you specifically is, at what point do you think it’s the cabinet shops problem to make sure the builder has made time and room for an installer. And at what point do you think an installer should be giving the shop a change order for not having the product FULLY ready and on site for me, on a site that’s also ready for me? Ps. I should mention that in Canada we don’t really do any of the ultra minimal face frame style cabinetry you guys do down there, even the cheaper stuff is full sized European cabinets. You can’t just throw all the cabinets up in a day or 2. Thanks. Brendon

[@cabbyhubby]

"Change Orders" are a builders best friend. I've worked for only 2 builders that were masters of the change order. The other 50 never quite figured it out.

[@flybyairplane3528]

JohnnyBDyer no bs, these can really kill you, , Cheers from NJ

[@dustinsunny2405]

Really appreciate you sharing your process, and experiences. For a young builder these are huge! Bless you and your family. Keep up the great work. Ran into your stuff last night and have been binge watching for the last 10 hours

[@f.macmaster2891]

Excellent video. I’m an older experienced contractor, but it never hurts to be reminded. Cash flow counts.

[@chrisboyd4433]

As an estimator, I was constantly reminding the PMs that they were making changes to the project without creating change orders and getting them approved. Next thing you know, we are over budget and the Owner doesn't think he is responsible. Change Orders ARE important!!!

[@andymac818]

Chris Boyd would love to get your insight and expertise on best way to estimate as I am getting ready to launch a design build company and am looking for time saving / accurate estimating processes

[@Tristonica]

Great video here Matt. It would be very helpful if you could do a episode on scheduling and time management especially is relationship to maintaining quality throughout a project.

[@buildshow]

Great ideas!

[@laszlodesimon4768]

This video shows, even more of the complexities to being a responsible good builder. Shamefully your customer was so shortsighted in not appreciating your integrity and quality building and did not accept helping you out in that situation. Another good lesson learned. Thanks for sharing.

[@Handleyman]

You’ve got a great channel there Matt. I’m honestly surprised that you don’t have more subscribers! I’m not a builder but I do a lot of DIY family and friends renovating, and your channel is full of great info. Cheers from Australia.

[@lesbendo6363]

Thanks for the video. Just starting the process of building a house on Mayne Island BC.

[@AmericanaWoods]

Thanks Matt! I suffer from the same problem. I absorb to many costs and even give a way extras thinking that I’m “pleasing” the client. It usually costs me 2-4% per job and I’m sick of losing it.

[@buildshow]

This video was for you Buddy!

[@lifeofabachelor8547]

The one thing that i did this spring before construction started and i was getting bids from companies to build my new house. was i had everything picked out. i had the house designed by a independent engineer, we picked framing material, insulation, hvac products including model numbers etc, i had tile picked out, vanity's, appliances, everything right down to the electrical plugs, and breaker box, even light fixtures. all i wanted from the builder was to build the house. i even set up accounts with local places so he can get extra stuff that is hard to judge how much is needed (caulking, plaster, nails, consumables) to get the stuff so that i know exact costs which i paid not the builder,and every week he is paid at friday so his employees can get paid the following friday. i also picked alot of the subs like plumbing, foundation and excavation was also done by a independant contractor, electrical is done by me, i am even making sure everything will be there on time for when he needs it. as a future homeowner i think its important that homeowners know this process and know what is going on i also usually visit the site every friday and sometimes during the week to go over things that should be done a certain way. i am wanting things done that they have not done yet such as fluid applied, zip r sheathing and flooring, ive used alot of your videos so they get some education in some of these products as well as using things to stop air flow. while it is unconventional and highly not liked by contractors to have the homeowner visit often as i am. the fokes who i am dealing with was well aware of this going into it and was ok because there were lots of products they get to try and im ok with that. (they are great builders and fine craftsman, high attention to detail)

[@Don.Challenger]

Well in that case I suppose you are the general contractor - hope everything is going smooth for you all.

[@lifeofabachelor8547]

@@Don.Challenger kinda but im not there every day even for 5 minutes. and i dont follow up with the crew every day. its sort of in between. with the general contactor taking a huge roll but also allowing me to be quite involved how i need/ want to be. so if i dont wanna show up i dont have to as i have someone there who is quite capable handling it. i just show up when decisions need to be made or when i want things done a certain way