Contractor’s Corner: Say no to saying no – Feb 2022

By Dave Stafford

You can become a victim of your own legendary prowess when your client believes you can do anything, even when you don’t have the experience, products, equipment or personnel. Do you tell them “no” and risk losing a client and a big job, or should you calculate your risk, give them an outlandish price and do what they ask? As Clint Eastwood’s Dirty Harry says, “A man’s got to know his limitations.”

Aggravating clients with unusual requests are a fact of life if you’re good at what you do. I was once recommended to the chief of procurement for a large military base by an existing client with a rave review: “Dave’s company has GSA contracts and specializes in flooring, complete installation and expert project management.” With such a review, I was happy to meet with the chief, until she said, “…and in addition to 9,900 yards of carpet, I want you to furnish and install ceramic tile with epoxy grout at the entrances of all 199 individual housing units.” My heart sank because we were just getting into ceramic tile. I protested that while I was eager to provide all the carpet, I would be unable to furnish and install the ceramic since we did not have it on contract and did not have the personnel.

The chief looked me in the eye and said, “Apparently, I am not making myself clear. I am going to place a single order for carpet and ceramic tile with one vendor. I don’t have time to go through multiple sources. I want single-source accountability. Now, do you want the carpet order?”

“Yes,” I stammered.

“So, find a way to provide about 3,500 square feet of ceramic with epoxy grout as part of the order or lose an order for $250,000 of carpet. Send me the combined quote on the carpet, ceramic and installation services by noon tomorrow,” she responded.

So, I began my education on ceramic tile and epoxy grout and adhesive. If you’ve ever used epoxy grout and/or tried to clean up after using epoxy, you’ll understand why I had more than one crew reject the job. After hearing about the challenges of cleanup, I budgeted about three times the amount of cleaner normally recommended. Due to my inexperience and trepidation, I assumed a 25% wastage factor on some materials and a 50% markup on product and installation. By this time, I was resigned to the potential problems and learning curve of the job, but willing to accept the risk at this price.

As I was making a verbal estimate of what my offer would likely be, the chief said, “Are you sure you’ve covered everything? I don’t want to see a bunch of change orders.” Now, I had the “change order door” closed to me; so, I raised the price on the ceramic portion another 6% and submitted the official bid. I received the purchase order the next day.

I wish I could say the project was easy. It wasn’t. The horror stories about working with epoxy grout are true and included firing two subcontractors for cause. However, we did finish on schedule, the chief was pleased and we got paid. It turned out to be the single most profitable commercial job that year.

WORK SMARTER
Monetizing extreme difficulty and presenting the opportunity is an art, and you must be an actor to pull it off. Be wary of minimizing the difficulty if you want to maximize your profit. As a code hacker once opined, “To fix the glitch, I would have had to review thousands of lines of code; so, I just wrote a small program to go and find it for me. I still charged a lot because, well, you have to pay for expertise.” In flooring, it may mean a new method of floor preparation that speeds up the end result.

When asbestos tile abatement was the big thing and many clients did not have the time or budget for take-up, disposal, adhesive removal, masking and draping areas, some astute companies started the encapsulation wave by leaving old carpet in place (since carpet removal also pulled up old asbestos tile) and using adhesive sheeting onto which new carpet was placed and became sufficiently bonded for typical traffic. This allowed a weekend installation of new carpet with minimal disruption to personnel and work activities.

A similar bright idea was vertical-lift installation where “the only thing between you and new carpet are acres of systems furniture.” Many facility managers had the money for carpet but not for disassembling furniture. A lot of money was made through lifting furniture, removing old carpet and installing new carpet tile. Once a demonstration was done and cost comparisons made regarding the project’s time to complete and productivity savings, the deal was easy to sell.

Years ago, when a concrete floor was spalled or otherwise damaged, one depended on troweled-down skim coating or patching to correct the surface irregularities. That was imperfect at best and greatly depended on the skill of the installer. Then came the Ardex-type cementitious poured floor: clean or shot-blast the floor, prime the surface, mix up the product, pour and allow it to seek its own level. Some versions dried in under an hour and new flooring could even be installed the same day on a clean, flat, smooth floor. While not inexpensive, this could be a time saver and permit an excellent, high-quality finished flooring surface not usually possible with other methods.

In all of these cases, what one was selling was the removal of installation nightmares through new installation techniques or product technology.

DON’T SAY NO, JUST BID SMART
The cost of saying no to the potential client is not about a specific job as much as what it says about your willingness to help them in time of need. You could be slamming the door on years of potential business and thousands or millions of dollars in sales.

I was prepared to do just that to a larger client because of a project’s difficulty and the improbable time for completion. However, Charlie, a grizzled project manager said, “Dave, you’re making a big mistake. Don’t tell him no, tell him how much-that’s what he wants to hear.” As we reviewed the project, we saw how we could do the job with a dedicated shipment, double teams of installers and special handling. So, I put prices together and said, “Jeff, we can do the job, but I’ll have to send a truck to pick up the product, have several teams do the work, and rent other space for furniture change-out and final inspection as we go through each area. And this is not a bargain-rate job. Here’s what it will cost.” Jeff blinked, sat down in his chair and said, “I gotta go find some money; that’s not in my budget.”

I just smiled and said, “Let me know what you want to do.”

Jeff found the extra money, and we did the job as a priority. For years afterward, Jeff remembered “how we pulled his fanny out of the flames,” not the extra money we charged him for it.

In another instance, we were unable to accommodate a client’s request on a high-profile rush job and had to decline to bid. Afterward, he was angry because our competitor botched the job! He had selected them when we weren’t available, and now he had to have it redone. An independent inspector determined that the floor was improperly cleaned and not primed according to manufacturer’s directions. A total loss. He did collect from the general contractor and “invited” us to submit a bid with a reasonable timeframe for completion. We did bid this time and were awarded the job. We went on to perform a variety of work for this client for years. He would occasionally bring up the time we said “no” and grimace. “Don’t ever do that to me again,” he’d say.

Keep a smile on your face and make a profit is what I’d suggest you do whenever you are given unrealistic completion times or requests for service or installation. Ask probing questions and find out the real reason for unusual specs, products or required services. Perhaps an architect or designer has a “new best friend” or a manager up the line has an ax to grind due to a bad experience.

In one memorable case, Raphael, a potential client, wanted an absolute guarantee that flooring would be installed by a specific date, and insisted on an onerous liquidated damages provision of $1,000 per day as part of the bid document. This was in a secure building that had yet to undergo demolition by the general contractor, so site conditions could not be fully assessed. Although rather inflexible, Raphael was willing to listen to concerns and scaled back the damages provision to $200 per day after we complained. We even kidded him a little about the “mind-reader” provision on floor prep. “You just be sure to bid the job as stated; if there are site differences, write up a change order, and I’ll approve if it’s reasonable.” In an unguarded moment, Raphael admitted that he had delivered a project late, primarily because the flooring wasn’t delivered on time, and had a very unpleasant experience with his boss as a result. He didn’t want to go through that again. As one of the few bidders, we did get the job and found he promptly approved most change orders as presented.

Another time, we were all primed to bid a furnish-and-install carpet tile job when the client, a large financial services entity, changed the scope of the job. They had decided that “it makes more sense for us to buy this quantity of carpet tile (40,000 yards) direct from the manufacturer and save some money.” The manufacturer, although a strong dealer advocate, blinked-the prospect of losing a large project like this to a competitor pushed them to agree to a direct sale. The new scope of work was a “labor only” job to perform installation, but also receive, inspect, stage and re-deliver carpet tile to the site as needed over an eight-month term.

Once we calmed down, we realized that just maybe this was a good thing. Now, we wouldn’t have to tie up our own credit lines for the carpet purchase. So, we worked up a creative menu of service prices for each component required for a labor-only project that would extend for months. Our margin was calculated to cover each individual segment of service that we would have included if we were furnishing the product. We were awarded the project on a “best value/most qualified” basis with a recommendation from the carpet manufacturer, and ended up turning more profit, with less grief, than if we had also sold the product. In fact, this became the model for several similar projects over the following years.

The greater the risk or degree of difficulty, the higher the markup. Your highest margin will come with new or different methods and technology. Build your profit through a menu of services that addresses a client’s most ardent worries. Never say “no” until you have first given your client options for you to say “yes.” A client who says “no” has only himself and his budget to blame.

Copyright 2022 Floor Focus

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