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Old 09-04-2018, 03:07 PM   #1
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Question Service Contract Do's and Don'ts -Wisdom Needed-

Hey everyone, looking to get some experienced feedback on service contracts. Here's my specific situation:

Been working for a large electrical contractor on a large scale public works project at a major state university for the last 2.5 years. While I've been on this project I've obtained my own electrical contractor's license with the idea that at the end of this project I would go out on my own and see how it goes. I live locally in town and its been a great job for me overall. My employer is from another part of the state and they want to pull all of their manpower off the job and are offering me the opportunity to stay on the job as a subcontractor to provide any warranty work, a few trade damage issues, and there are a few light fixtures that we're waiting on replacement fixtures/lenses to complete the project.

I have not yet negotiated any rates as I just heard about it this morning. Assuming it will all be T&M or some sort of piecework deal from what I've talked through with some other older guys on the project. They have offered to pay my fees to register my license # as public works contractor which I've heard is difficult to get through. Also gets my foot in the door at the University because I've heard that to bid their projects you have to have had experience as a public works contractor.

Seems like a good incentive and a great opportunity to start my business off with some solid high paying back-log. BUT, again I just got licensed and have very limited experience with getting taken advantage of at this level so I'm looking for insight as to what to negotiate to make this a sweet deal for everyone involved. My company has been pretty good to me and I don't feel as if they are going to screw me over, but it would be easy for them to steamroll me because I don't know what I'm getting into. What red flags should I look for and what should I make sure happens. Thanks a lot y'all.
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Old 09-04-2018, 03:27 PM   #2
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Tell them you really appreciate the opportunity and would love to see it come to fruition. Ask them to provide you contracts they have had with others so you can see what you're getting into and so you can ask for a peer review from a friend in the business, all in an effort to make this opportunity a success for them, for the University and for you.

Good luck. Sounds like a good situation to be in.

Just off the top of my head I'm thinking 2x scale wages. 1x scale wages will cover your time on the job and the other 1x wages will cover overhead & profit.
Less than 8 hours on a call should warrant an extra hour mobilization charge.
Helpers are billed at .75x the rate of a journeyman, etc.
Others will know better than me but just off the top of my head that's what I come up with.
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Old 09-04-2018, 03:33 PM   #3
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I don't want to be a Negative Nelly or a Debby Downer, but this seems like it might be too much to handle as your first job. There is a lot of compliance and small mistakes can mean you lose everything.

It's great to see your ambition. Good luck with whatever you do.
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Old 09-04-2018, 03:36 PM   #4
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With players that big, you should get an attorney that works this beat.

They are not at all like regular accounts.

I presume you're dealing with the State of California's universities.
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Old 09-04-2018, 04:07 PM   #5
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Edit, This is one I'd only respond in detail on the private section.

If you play your cards right this could be a big break, if you play them wrong, it could break you, so plan carefully.
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Last edited by splatz; 09-04-2018 at 04:09 PM.
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Old 09-04-2018, 05:08 PM   #6
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Quote:
Originally Posted by telsa View Post
With players that big, you should get an attorney that works this beat.

They are not at all like regular accounts.

I presume you're dealing with the State of California's universities.

Correct! Just wanting to leave the name of my employer out to keep it unbiased and honorable.
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Old 09-04-2018, 05:14 PM   #7
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Something i learned, or/and are still learing is how to read people

One can have impressive contracts , extrodinary detail (google AIA401)

But, and this is the epithany so many have .....it is only paper

Best of luck Dee
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Old 09-04-2018, 06:48 PM   #8
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The way to find a specialist attorney:

Martindale -- Hubble.

https://www.martindale.com/

You CAN'T just use the phone book// Google.

The above master database is where attorneys turn to when THEY need an attorney.

What you'll find when dealing with the government and its contracts is that you need a specialist attorney just so you don't step into a cow pie.

Typically you'll need to add an appendix to their dream contract that affirms your rights. Under no circumstances should you EVER believe that they operate from a gentlemen's agreement basis. They don't. They are compelled to go by the book. Period.

One BIG issue will be your Scope of Work.

Also you'll be dinged if you run low on man-power. Don't assume that 'the system' will have any sympathy if jobs run long or have complications.

Don't be surprised if it doesn't turn out that you need to sign with the IBEW just so that you can tap the hall for talent with virtually no notice.

Your scope of maintenance will almost certainly entail using strictly j-men and masters.

The work is being sent your way because the departing EC can't bear the overhead demanded by the counter-party when he can't spread it across enough labor hours.

You'll also find that the university will have amazing restrictions as to when you can even work... and other stuff you don't know a thing about. It's all been hidden from you by your current EC.

If you handle yourself right ( get a specialist attorney ) then this could be the break of a lifetime. You could be setting yourself up as a NECA/IBEW contractor able to bid in the Big Leagues... become a multi-millionaire... many times over.

If I were in your shoes, I couldn't say no.

You may well also want to bring in an accountant that is also a specialist who deals with state contracting. It's a strange, strange world, very unlike regular contracting.

I've been inside government, issuing the checks, and outside, issuing invoices to the government. Trust me, the dealings, the paperwork, are not at all like non-government practice.
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Old 09-04-2018, 10:32 PM   #9
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Quote:
Originally Posted by splatz View Post
Edit, This is one I'd only respond in detail on the private section.

If you play your cards right this could be a big break, if you play them wrong, it could break you, so plan carefully.
What's the private section? I'd love to hear the details, trying to get as deep in this as I can before making the decision.
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Old 09-04-2018, 10:34 PM   #10
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What's the private section? I'd love to hear the details, trying to get as deep in this as I can before making the decision.
I am not sure you have enough posts to get there yet.

Start participating on topics and then you can have access to it, although I am not sure the number of posts required.
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Old 09-05-2018, 07:25 AM   #11
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One industry standard is AIA401.

and i hate to have to say it, but to really become a good contractor, one has to livge through a few bad ones.

Consider, even AIA has it's hidden clauses...

Dangers of AIA 401 Incorporation Clause

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Old 09-05-2018, 11:48 AM   #12
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Quote:
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What's the private section? I'd love to hear the details, trying to get as deep in this as I can before making the decision.
I'll just post some general ideas...

Pay very close attention to the payment schedules. You can and probably must structure it so you're not waiting too long for payment. If you don't nail it down, expect to wait three to six months if all goes well.

Put a great deal of thought into how you're going to handle materials. You can and probably must structure it so they're supplying materials. You won't get them to supply everything in advance; you need to structure the agreement so they are paying you even faster for materials / reimbursables / expenses.

Hope for the best, prepare for the worst: get the attorney to explain the lien process and make sure your contract is structured so you can pursue non payment and come out whole.

Don't think because everyone's been great so far they'll always be great. All it takes is one bad apple in their accounting department to make your life hell - unless you have your ducks in a row and you can collect.

Remember the subcontractor's creed:

It is better to be
OWED
than
STUCK.
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Old 09-11-2018, 05:21 PM   #13
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Thanks everyone, I still haven't had the official negotiation yet, but heres what I've verbalized with my direct superiors thusfar:

I will get paid within 30 days of work completion.

I will get paid for a day rate regardless of time spent on site.

Any required additional material valued at over $1000 will be purchased by them and delivered on site.

Discussed scope is to complete the remaining contract work (which at this point is installing about 3 dozen light fixtures, all the wiring and infrastructure already in place) and handle any warranty calls over the next 12 months. Imagining lots of replacing ballasts, breakers, GFCIs etc. There are 2 bigger-ish jobs that they are offering to me, which are replacing 2 lighting control panels that got sprayed by the painters and up sizing a transformer and the 4 panel boards that are being fed from it, which I haven't yet agreed to. Those would be easy as I did the work putting in whats already there.

I have also been approached by the the general with a few change orders that my company doesn't want to pick up. This stuff I'm more nervous about, but again its all been just talk so far haven't been asked to bid anything yet.
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Old 09-11-2018, 06:42 PM   #14
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if the work is drawn out, or the contract is an extended contract, completion can be an insane date. specify progress payments for projects for which completion is greater than (xx) number of days (or whatever you are comfortable with).

look at the bad side of everything you are reading (contract wise), and imagine scenarios in which you could possibly get screwed, and negotiate to the contrary. read it as if you are reading it for the first time.

good luck
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Old 09-11-2018, 10:22 PM   #15
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Wild nails it: government is a sure pay... but sure to pay slowly.

It's NOTHING for the government to be behind by eight months!

If you have to borrow $$$ to stay afloat, by contract your interest expense can usually be back-charged to the government... they don't mind!

So... you'll need to have a wise and seasoned banker on hand.

Someone who is used to the strange, strange, strange ways of the government.
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Old 09-12-2018, 04:55 AM   #16
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Quote:
Originally Posted by dee12 View Post
which are replacing 2 lighting control panels that got sprayed by the painters and up sizing a transformer and the 4 panel boards that are being fed from it, which I haven't yet agreed to.
painters, methinks if i took a nap on their jobs ,i'd wake up a different color.....~SIS~
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Old 09-12-2018, 08:43 AM   #17
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Quote:
Originally Posted by HackWork View Post
I don't want to be a Negative Nelly or a Debby Downer, but this seems like it might be too much to handle as your first job. There is a lot of compliance and small mistakes can mean you lose everything.

It's great to see your ambition. Good luck with whatever you do.
He's just starting out. Losing everything can't be much at this point. Providing he puts his business in a separate entity.
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Old 09-18-2018, 04:59 PM   #18
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I have plans to incorporate as soon, but currently Sole Prop and wanting to start the corporation on Jan 1 for convenience sake, but Not sure if I will be able to pull that off in the next 3 months.
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Old 09-18-2018, 05:03 PM   #19
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Quote:
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I have plans to incorporate as soon, but currently Sole Prop and wanting to start the corporation on Jan 1 for convenience sake, but Not sure if I will be able to pull that off in the next 3 months.
I started my LLC at 12:30AM on a November 30th. I was talking to some people here at the time and just said f**k it, it's time to do it.

When filing taxes, it's the same as a sole proprietorship.
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Old 09-18-2018, 06:15 PM   #20
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Quote:
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I have plans to incorporate as soon, but currently Sole Prop and wanting to start the corporation on Jan 1 for convenience sake, but Not sure if I will be able to pull that off in the next 3 months.
An LLC may do what you need for less money and be easier to run. You do need to get out of the Sole Proprietorship, because, you are personally responsible (if you get sued you could lose everything).

btw one time a guy's teenage daughter killed somebody in a car accident. He got sued & lost everything his business etc.
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