Success Beyond The Brush

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In This Episode
Mark and Scott discuss:
  •  Why scope creep quietly destroys profit 
  •  How one unapproved jobsite decision can erase an entire job’s margin 
  •  Why crew leaders need to treat the work order as the source of truth 
  •  The difference between great customer service and giving work away 
  •  Why exclusions are just as important as inclusions 
  •  How to precondition customers for unknown conditions 
  •  Why contractors should document change orders before doing the work 
  •  How to train crews to talk about added work without sounding combative 
  •  Why time-and-material agreements can create customer frustration 
  •  How photos, notes, and detailed proposals protect the company 
  •  Why “clear is kind” applies to customers, employees, and profit margins 
Key Takeaways
1. Scope creep usually starts small
One extra patch, one added coat, one unplanned repair, or one customer request may seem harmless. But when those little extras pile up, they can turn a profitable job into a losing job.

2. The work order needs to be clear enough for the crew to execute
Scott explains that a properly written estimate should include enough scope detail, photos, notes, inclusions, and exclusions that a crew leader or project manager can understand the job without needing a second sales conversation.

3. Exclusions protect both the contractor and the customer
A vague proposal like “paint living room” or “paint house” creates room for misunderstanding. Clear exclusions help the customer understand what is not included in the price.

4. Change orders do not have to feel confrontational
Instead of saying, “That’s not in the contract,” crews can be trained to say something like, “We’d be glad to take care of that for you. Let me get you a price so you can decide how you’d like to move forward.”

5. T&M work still needs expectations
Time-and-material work can be useful, but customers often misunderstand what they are approving. Giving a range of expected hours and material costs helps prevent surprise invoices and sour endings to otherwise successful projects.

6. Great customer service does not mean giving away profit
Small value-adds can be part of a great customer experience, but contractors need to know the difference between going the extra mile and giving away hours, materials, repairs, or coats that were never included in the price.

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🎧 Credits

🎙️ Hosts:
Scott Lollar — Founder, Consulting4Contractors
Mark Black — Owner, Men In White Painting, Mt. Vernon, IL

🎵 Production:
Siren Mastering — Original music, artwork, transcripts, show notes & audio engineering
https://www.sirenmastering.com
  • (00:00) - Nice Guy Profit Trap
  • (00:37) - Welcome to Success Beyond The Brush
  • (02:10) - Mold Surprise Story
  • (05:11) - Unforeseen Clauses and Options
  • (08:24) - Defining Scope Creep
  • (09:55) - Crystal Clear Proposals
  • (13:49) - Photos and Exclusions
  • (15:24) - A Taste of Coaching Offer - Limited Time!
  • (16:13) - Contractor Psychology
  • (19:13) - Word Tracks for Upsells
  • (21:05) - Quality Expectations and Check Ins
  • (25:13) - Change Orders and T&M Risks
  • (28:02) - Clear Is Kind Wrap Up
  • (30:22) - Add Value Without Giving Away
  • (31:53) - Thanks for listening to Success Beyond The Brush!

What is Success Beyond The Brush?

Host Scott Lollar is a 35-year veteran of the painting industry and founder of Consulting4Contractors. The 'Success Beyond The Brush' Podcast serves as a touchpoint to painting contractors who have hustled, sacrificed, and worked hard to get their business to where it is today. Now, you need the guidance, expertise, experience, and team to make it into the multi-million-dollar company of your dreams. You'll hear stories and interviews from "Brothers of the Brush" and "Sisters of the Sprayer" who have been where you are and are charting a new course for their company's success. Listen in and go beyond $1,000,000!

SBTB Ep. 24 | The Profit Killers: Navigating Scope Creep and Change Orders
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[00:00:00]

Nice Guy Profit Trap
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Scott: A lot of people think that great customer service is doing what your team just did. Like, well, we're just going to go ahead and do this because that's what good, nice contractors do, and we're just going to do it because that will get, get us a five star. And what they don't realize is it's going to very likely make the job less, if not, not profitable

Mark: Yeah, and this one definitely ended up being not profitable, but specifically because of what we're talking about today. We gave away a ton of work that was not, and really could not have been known at the time of the estimate.

Welcome to Success Beyond The Brush
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Welcome to Success Beyond the Brush, the podcast helping painting contractors build stronger and more profitable businesses. In this episode, Mark Black and Scott Lollar dig into one of the biggest profit killers in the trades: scope creep. From unexpected mold behind popcorn ceilings to customers asking for just one more thing, they break down why clear estimates, strong [00:01:00] exclusions, documented change orders, and well-trained crews are essential to protecting your margins.

If you've ever finished a job wondering where the profit went, this conversation is for you. Let's dive in with Mark and Scott

Mark: Hello everybody. Welcome to the Success Beyond the Brush podcast. I'm your host Mark Black, here today talking with Scott Lollar of C4C.

Scott: Hey, Mark. Good to talk to you as always.

Mark: Always good to see you, sir. We have an important subject to discuss today, but first, a story. So this subject we're going to be discussing today is we're going to entitle it The Profit Killers: Navigating Scope Creep and Change Orders. It is a subject near and dear to every contractor's heart, and we all kind of roll our eyes.

Mark: Of course, different personalities approach this problem differently. But every painting company out there, really every probably small business, especially in the service industry, [00:02:00] has this problem, and we want to discuss some tips and tricks of how to properly think about this, how to avoid negative interactions with your customers.

Mold Surprise Story
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Mark: So because this is near and dear to my heart, this happens all the time in our company, actually just this week. It is currently Wednesday. On Monday we had a very frustrating interaction with a crew leader who last week was at a project and brought the project in about 30 hours over bid. Now, it happens so regularly, it's easy for me to just say, "I mean, 100 things could have played into that, whether it was drive time or lower skilled guys. It's not that bad." But it is, right, Scott? It is.

Scott: I think it is bad

Mark: Also, when I found out the why, because we have our crew leaders fill out a form at the end of every job. It's just a project completion form, and talking about the materials they used, the hours. If they went over, we want to know their explanation of why.

Mark: And this crew leader just clearly wrote it [00:03:00] out. W- we ran into all kinds of problems with mold and problems they were drywall repair and painting in some bathrooms, so a high moisture environment. Found all kinds of mold, took 30 hours longer to fix it all. To which I replied... What do you think I replied?

Mark: " Mold?

Scott: yeah

Mark: W- wait a minute I was the estimator. I was the salesperson. I remember selling this job three weeks ago. There was no mold." "Oh, yeah. When we started scraping the popcorn back, we uncovered all kinds of mold. There was all kinds of issues in there. We had to fix it." " Okay, fine. Conversation's fine so far.

Mark: What was the conversation with the customer?" " Oh, she was never home."

Mark: S- so wait a minute. So wait a minute. And another way of looking at this for people who have a hard time or are bleeding hearts like me, Mr. Nice Guy, I want to be a friend to my employees, I want to be a friend to my customers. Of course, we want to take care of your mold. We don't just want to cover it up. But why do you feel the freedom to give away my money to give the customer more [00:04:00] work that we didn't know about simply because the truth is you did not want to have an uncomfortable conversation?

Scott: Yeah. And I do think that a lot of people think that great customer service is doing what your team just did. Like, well, we're just going to go ahead and do this because that's what good, nice contractors do, and we're just going to do it because that will get us a five star. And what they don't realize is it's going to very likely make the job less, if not, not profitable.

Mark: Yeah, and this one definitely ended up being not profitable, but specifically because of what we're talking about today. We gave away a ton of work that was not, and really could not have been known at the time of the estimate. And I think that's something we need to talk about today, is that I think a lot of contractors, we want to be the professional so much that w- we kind of...

Mark: I don't know. It's like covering up a mistake. Like, oh, I didn't [00:05:00] catch that at the bid, so I'm just going to include it because maybe I should have caught it at the bid. Have you ever talked to customers like that?

Scott: Yeah. Oh man, that's a good one. So, I think this is a great example.

Unforeseen Clauses and Options
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Scott: So there's a lot of ways we could have handled this, which is I think we would really recommend that unforeseen condition clause be included in your contract.

Scott: So things like scraping popcorn in your, in your market or stripping wallpaper. How could you possibly give someone a price to do something for which you don't know what's behind it?

Scott: Now, maybe you have enough experience at scraping popcorn that you pretty much know how it's going to go, but do you always know how much damage you're going to uncover or that there's going to be mold or mildew behind it? So, you know, preconditioning the client, first of all, to, yes, we absolutely are very good at this, and we do it lots of times, and here's what we find. And so we want to condition you for some possible outcomes so that you're not surprised. So that would be an easy way to handle that. And the [00:06:00] second thing is I would often just put right in the contract how much it's going to cost when we incur what we think we're going to incur.

Scott: So back in the, say, 2000s uh, we were getting a lot of pushback because we were bidding two coats on trim because that's what it took to cover it. But we were, you know, getting beat by the guys that are saying one coat. Well, I knew it wasn't apples to apples, and I knew it was going to take two coats.

Scott: So I conditioned the client to say, " We think the better approach is two coats on trim. I'm going to include one coat in the price. I will give you the second coat as an option because that's where we're headed. I'm going to tell you today what I'm going to end up telling you in two weeks," but it helped me be more apples to apples in the quote.

Scott: But I went ahead and said, "Here's what's going to happen. I just need you to know you're going to be unsatisfied with this," and just went ahead and told them how much it's going to cost to do it the way we think you should do it.

Scott: So there's a couple of ways to approach that, but you are the expert, [00:07:00] and I think that we do see often some frustration with sloppy or lazy salespeople or people that are afraid to give them the right, true price or the, all the facts because they think, "Well, I'm going to lose the job if I tell them it's going to be mold and this and that and the other," when in fact they've asked us to be the expert.

Scott: And I think actually giving that information elevates us as the expert, even if we line item it as options, but giving them what's going to happen as the expert is really important. So if we have a lazy or sloppy estimator, then we do need to address that.

Mark: Yeah. A- and speaking as the estimator from that job, I would defend the work order in the fact that all that we knew about was there was some tape pops, there was some nail pops. We're going to scrape this popcorn off, repair the drywall, and paint the ceiling. I was very clear in exactly how many coats of primer and top coat, and the fact that we weren't painting walls.

Mark: I had my exclusions in there. What I did not know is that there was mildew or mold forming [00:08:00] underneath the popcorn. It just hadn't become visible yet. And so I felt like it was a great opportunity to train my crew leader to just say, "Guys, you gave away our money as a company a- and you don't have permission to do that.

Mark: The work order is your Bible. Anything outside of that is an addition and has to be confronted with at least the office, but specifically usually a conversation with the customer."

Scott: Yeah.

Defining Scope Creep
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Scott: So what we see often is what we would call scope creep, right? It's just one more thing and, oh, let's just go ahead and take care of that. And oh, I'm down here on my hands and knees and I see a little thing. And each one by itself is reasonable to take care of, but then you end up having 20 of them, and next thing you know we're doing a whole different thing.

Scott: So scope creep can be a really real thing, and we have to determine, and we have to train our team and our subs the same, whether it's a employee or sub model, is how to identify scope creep, how to match it back [00:09:00] to a proposal. We talk often in these podcasts about the fact that there's been a conversation between a client and an estimator that says, " These things don't bother me.

Scott: Just paint it." Right? And then someone goes in there and thinks they're going to restore this like the Taj Mahal and understanding the scope of work, hopefully, was written to reflect that conversation, right? This is what the customer asked for. They didn't ask for it to be restored to like-new condition.

Scott: They asked for it to be refreshed. They're selling the house or they don't care.

Scott: A lot of people don't have the eye that a, a craftsman does. So really tracking back and understanding the w- the work order is critical.

Mark: How would you suggest training our team of the importance of work orders without creating an attitude of, " That's not on my sheet of paper, so every single thing I see is a dunk, dunk, dunk, work order, or a change order"?

Scott: Yeah.

Crystal Clear Proposals
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Scott: So I think clarity in a proposal is really [00:10:00] critical. I'm an advocate, and I'm, I'm well, well known as saying exclusions can be as critical as inclusions.

Scott: I see a lot of people, especially these whippersnapper sales guys, they just want to throw a number and close hard. But the details matter. So when you, you make very general statements, we're going to paint the house. That, that's a crazy statement. Like the whole house? Like my chimney? Well, your chimney's not painted.

Scott: But you didn't say not the chimney, or you didn't say not the gutters or the flashing or the

Scott: aluminum garage door or the gas meter or... I mean, there's a lot of things that if I'm just a little homeowner and I don't know what I'm talking about, you said I'm painting everything, that you actually did agree to paint everything.

Scott: So I think getting clear with the walkthrough and say, "Tell me exactly what we're going to do and how, you know, why we're going to do it, level of prep," you know, these types of things, and then documenting that in the [00:11:00] proposal, so it's really clear. I'm a advocate of saying, I want to show a crew leader or project manager the scope of work, some pictures, and any notes I might have taken that I did not want, you know, the customer to see, like, hey, this lady's crazy, or don't step on her roses, or whatever it is. But between those things, I should h-- they should be able to go do the job without talking to me ever again. That's the clarity I want in the estimate with some supporting pictures. And if you can't do that, then I'm going to suggest that it's not clear enough because that's what the homeowner is expecting you're going to do.

Scott: And if you haven't been that clear, then I don't think it's clear enough. The other thing is that can be very helpful is exclusions, because exclusions are the areas that we usually get in trouble, right, Mark?

Mark: That's exactly right. It, it does for me. A- and Scott, every time we talk I'm sensitive because I know every time we talk I use the analogy of food, but it's because I love food. And [00:12:00] restaurants have already preconditioned all of us this entree comes with two sides. We all know that feeling. Or three sides.

Mark: Th- they designate it for you, they tell you what you get. "Here, you can pick from this, or this, and if you choose anything else, it will be charged a la carte," right? If your dinner doesn't come with a salad and you order a salad, you expect to pay more. We understand that in the food industry, but it does not translate as well to home services.

Mark: Customers often just say, "I want a new roof," or, "I want my house painted." They don't think linearly or, or line item like we do, what does that mean? They just know they want the house painted. It is up to us to explain to them what that includes, and that becomes our, our bid. This is what you get for this price.

Mark: And to your point on designating scope clarity of, of what is included, what is excluded, what specific products, number of coats, exemptions, possible space delineation. You were [00:13:00] talking earlier about well, an exterior. I was thinking about an interior. A lot of times, you know, a kitchen flows into the living room with these open floor plans that we see a lot these days.

Mark: W- what do you mean living room? Where does the living room end? Does that continue down the stairway, up the stairway, down the hallway? To what corner are we going to go? And I have found that a lot of my competition does not clarify what they mean. They simply say, "Paint living room." Okay, but what does that mean?

Mark: And so of course we can protect ourselves by being clear in our original bid. I am thinking about how to be clear with my team, which actually empowers my team when they know exactly what is included for this price. You also know what is not included, and anything else that is outside of this work order becomes a change order

Scott: Yeah.

Photos and Exclusions
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Scott: And there's no excuse really, in my opinion, with the technology we have. So we have a picture app, like Company cam, and we can annotate that, right? And we can make that [00:14:00] part of our proposal in all of our estimating platforms.

Scott: I don't care which one you use. But you can point, stop here, not included, patch this crack.

Scott: So it can be really clear to both the homeowner and the team to say, "This is exactly what he means by repair this crack." Or, you know, he-- they can really track back what they're seeing live to the picture. So there's no excuse. And then the other thing is we've learned, and I'm assuming everyone knows this, is that you know, you, you just have to use words with your items in your s- in your proposal.

Scott: So are-- you know, if you're painting only one room and you've said, "I'm painting the door," I think it's pretty reasonable th- for a homeowner to think like you're going to paint both sides of the door. I mean, I don't think they would under, you know... And yet if your proposal says one side of the door and one side of the frame and jam, right?

Scott: That makes sense. So then we stated it. Or closets are excluded. And the other one we run into, Mark, a lot is that they said, "Oh yeah, we'll clear these. We'll, [00:15:00] we'll organize and clear everything out and take everything off the walls," and you show up, and they've done almost nothing. And they think they've done something heroic because they did one little thing. And so to, to get clear, and again, this can be in your boilerplate terms and conditions about how they're supposed to prepare for us, our arrival, and understanding if they don't, there's going to be some some changes to our proposal.

A Taste of Coaching Offer - Limited Time!
---

If today's conversation has you thinking about where profit may be slipping through the cracks in your own business, Consulting4Contractors can help you. C4C works with painting contractors and other service-based business owners to build clearer systems, better scorecards, stronger estimating processes, and healthier profit margins.

Through a Taste of Coaching, you can experience short-term coaching with either Scott Lollar or Rick Holtz without a long-term contract. It's nearly 50% discounted opportunity compared to their premium coaching package, and spots are limited. Check the show notes or video [00:16:00] description for additional resources, links, and information on how to book a free discovery call at www.consulting4contractors.com.

Let's hop back in with Mark and Scott.

Contractor Psychology
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Mark: Let's dive into the psychology a little bit here specifically from the contractor. So this is a sensitive subject because so many contractors are aware that the public in general is very sensitive to... don- and I'm just saying contractors in general. This could be a general contractor, roofers, plumbers, electricians, painters.

Mark: Anybody in the trades is going to give me one price, and then by the end I'm going to pay nearly double, because it's kind of a foot in the door price, and then everything else starts getting added on. So those of us that are trying to build quality businesses are very sensitive to that fact, and we approach every interaction as if we have to prove that we're not cheaters, we're not liars.

Mark: I'm not the big contractor who's ripping you off. B- [00:17:00] but by being that nice guy contractor, we end up giving... I would hate to see in my career how many tens of thousands of dollars we have given away for free. Maybe occasionally that was the right move because we messed something up, but how many opportunities did we miss to just recoup what we had actually earned?

Mark: And we're so sensitive to the fact of getting accused of being a typical contractor, you're trying to rip me off type of thing, that we end up giving a lot away. Do you see that in, in the people you talk to?

Scott: Yes, and I reiterate that the table has been set by the estimator in that conversation to, to really gather what is a great project looks like to them so that you can look at it through their eyes, not through your eyes. You might think their expectation is very low, but if that's their expectation, you price it to that.

Scott: So, I think that these documents are critical to avoid that. Now, I think in my [00:18:00] world, I would always have a little credit in the bank, so to speak, for doing a few extra things. I'm not talking about necessarily hours and hours or percentages, but, you know, there's little things that, like you said, you don't want to nickel and dime them to death.

Scott: And we've all been there where it's like, "Oh, you wanted that?" You know. "Oh, you, you wanted me to, you know, trim around the edge when I mowed your lawn. Like, I, I didn't even think that was extra, but okay." You know, you don't want an Ă  la carte experience. You want there to be give me what it would take to do this project and make me happy and look good, right?

Scott: I mean, so I, I think that understanding what the customer wants is critical. Now the other thing I would say is, is it okay if the customer wants something more when you arrive, or have they changed their mind? And I think we shouldn't necessarily go automatically to, oh, these people are crooks.

Scott: They are just this kind of person. You know, [00:19:00] we have bias against, oh, this is... I see it coming. So I don't think that's necessarily where we should go to, a lot of people are just naive. You're like, "I don't know. They said they're painting the door. I thought it was..." You know?

Word Tracks for Upsells
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Scott: So but if, if they want something, Mark, is it okay if we have that conversation?

Scott: So I think training our on-site personnel to how to have these conversations with a certain amount of emotional intelligence. So using your food analogy, how many times have you asked for something in addition to, like, whatever, you know, you want something and they say, "That's going to be extra."

Scott: This is a, like a negative combative thing. Like, "No, no, no, I wanted, you know, sour cream,"

Scott: or whatever, Right.

Scott: Or, "I wanted a rub

Scott: on my steak." And so how do they present that back to you? "I'd be glad to do that, Mark. Of course, you can have that." So that's one option, just to say of course, and then tack it on your bill and you might be shocked.

Scott: Or how about this? " [00:20:00] Yeah, I'd be glad to do that for you. That would be an extra dollar. Will that be okay?" Okay, so, you know, you're going to get what you want the, server's acknowledging that it's an upcharge, but then getting your buy-in or your permission. "Hey, you know, is that okay?" And I think some word tracks, some training with our team can be very helpful. And it might just sound like this: "I'd be glad to give you a price for the closets. Let me go get a pad of paper, and I can work that out for you and see if you want to move forward." Very low pressure, no giving it away. Neither is it the, "It's not on the contract. That isn't in the scope of work." Who wants to hear that?

Scott: Like, wait a minute, I'm dropping all this money on a paint job and you're saying I can't have this one thing?

Scott: And I think that, you know, presenting that in a way that's not adversarial is really helpful because I don't think we should assume that they're trying to rip us off. On the other side of the coin, [00:21:00] if these are people that are going to, you know, squeeze us till we cry uncle, then we need to nip that in the bud as well.

Quality Expectations and Check Ins
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Mark: Yeah, I think the conversation gets really difficult when they are just asking for a level of quality that, I hate to say it that way, but that we weren't prepared to... You know, they want the trim festooled six times to make sure there's not a shred of anything. That's not our standard prep.

Mark: That's where it gets a little difficult and usually we ended up just giving that work away. It's easier when it's completely separate. "Hey, I've got another bedroom." That's an easy addition. Or, "I also want the deck done while you're here." That's an easy addition. Gets a little bit harder, y- you mentioned earlier the number of coats.

Mark: You know, "Here's what your ceiling looks like with one coat," which is what was included. That can feel like a bait and switch t- to a contractor. But again, as you said, those are the conversations we're having upfront, the explanation that generally a ceiling will cover white on white in one coat with a [00:22:00] good quality paint.

Mark: That's why we bid one coat. And I kind of use that jargon as a salesperson, especially if I feel like the customer's price sensitive. I just say, "Hey, we can do this two ways. I can give you the worst case scenario, which protects all of us. I'm going to do two coats on everything and do full prep so I know exactly we are covered 100%.

Mark: You're not going to like that price. Or I'm trying to be your friend here. I'm just telling you that my experience is this ceiling will probably cover in one coat, so I'm going to give you a one coat price. Your trim looks in pretty good shape. I'm going to do one coat with a good trim enamel. I think it's going to cover in one, and that's going to reduce your price.

Mark: But understand that you're just getting one coat for that price." And if they're a part of that discussion, then they feel fine, just like the server at the restaurant asking, " Just so you know, that is a little bit of a, an upcharge. Is that okay?"

Scott: Yeah. I think to your question about quality I think that's a good reason that we should have good communication on [00:23:00] site with the homeowner or the client is to, to ask them to continually approve the work, to get a sense that we are actually delivering the quality they want.

Scott: Sometimes we can just turn it up a notch if we s- if we get an indication that they were expecting just a little more.

Scott: And it's not a big effort if we can do it in the moment. If we wait till we're done, and then they say, "Everything's pretty good, but, you know, I wish you had done this a week ago,"

Scott: You know. So I think that communication, and I think this is what we're talking about. The people that we know that work in the trades, typically, we think of them as more introverted, more just want to work with their hands, and we-- It doesn't mean that they're not agreeable to talk to someone. It's that they haven't been told how to talk to them, and it can feel like conflict.

Scott: So we have to break these conversations down to say, "Hey, this isn't conflict. This is just a question." The question is, would you like this or would you like that? And it's up to you. [00:24:00] That will cost a little more money. I'd be glad to give you what that will be.

Scott: Or we can call the estimator, and they can talk to you.

Scott: But understanding and training our craftsmen how to speak and how to talk. I think some of the services that have done this well are HVAC, plumbing, and electrical. They're very non-emotional when they deliver what something's going to cost, and they don't seem to be fazed by the fact that they just told you, you have to replace your whole furnace, and it's going to cost whatever. So, why do they not get upset, but we get upset or nervous or unnerved when we have to tell someone we need to charge them a hundred bucks for something? So I think really just getting some training and some understanding that this isn't conflict, this is just a conversation, and we both want the same thing.

Mark: Yes, I completely agree. I think to your point too, that our crews often think that conversation's going to be a lot harder than it actually is. You know? It's simply going to be a little bit more, because [00:25:00] that was not included in... And I don't like that phrasing, not that it wasn't included, but we'd love to provide that service for you.

Mark: That will be an additional whatever. And most customers d- do not care. They just want to be communicated well.

Change Orders and T&M Risks
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Mark: What is your opinion on the dreaded time and material? I will, you know, I'll just track that separately, and I'll send you a bill for whatever it costs.

Scott: Yeah. There's a couple of things I was going to just say is that documenting and getting signatures. So all of our preferred estimating platforms have the ability to send electronic documents. They need to see in writing and provide a signature for this change order because a lot of times people forget that they approve this or they were hoping that you were going to forget. And so having that agreement, I think, is really critical. We're not talking really about commercial today, but in commercial, those things are critical or you're not going to get [00:26:00] paid. But the documentation should be either a firm price or a range, and that's to your T&M. So this idea of, hey, we can just track our time and charge you time material, and the customer says, that's fine. There's often a disconnect between what you mean and what they think. So they might think that's twenty bucks, and then you submit a change order of two hundred. Or we have had clients, especially in the carpentry side, where we had an estimator that they just thought T&M was the way to not ever get pinched on something.

Scott: So it was time and material always, and there's all these approvals. And what was happening was the customers were getting very frustrated when they were getting these crazy bills for thousands of dollars of material alone, let alone the labor. And they never had a clue they had approved thousands of dollars of something.

Scott: They had a different impression. So what we [00:27:00] did with that client is we developed a policy that says, firm bids are preferred because, first of all, it's a way to make more profit than the guaranteed perception of T&M. Secondly is it gives a range of what we're thinking this is going to take so that the customer can understand the value. So every change order, if it was T&M, had to have a range of it's going to be between five and seven hours with a material expectation of this. It doesn't mean that we always hit it or we couldn't have, you know, have some bad news after the fact, but what it did was it eliminated the customer being surprised that what they had approved

Scott: was so much money, and it just leaves a bad taste in their mouth at the end of what was otherwise a, an successful project and a great outcome. The final interaction is sour grapes because they had to pay a [00:28:00] bill that they didn't anticipate.

Mark: Yeah.

Clear Is Kind Wrap Up
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Mark: A- as a younger man, when I first started my company, I really wanted this super honest, upfront, just neighbor next door type of interaction with every customer, and it was such a, it was such a um, don't know a selling point to me that the quote that I gave you, the bid that I gave you is your final invoice.

Mark: I told you what it would cost, that's what it's going to cost. I just wanted to be that Mr. Dudley Do-Right type of guy, and it didn't take long to understand why that's so dangerous for a young business and how much either people were taking advantage or I just wasn't running a good business in terms of tracking my costs.

Mark: I simply... I guess I want to connect with anybody out there who feels like me of I, I want to be Mr. Nice Guy, and I hate asking customers for more money, is that, that starts, if I'm hearing you correctly, that starts at the estimate, that we're specifically addressing this. We actually have a form in our bid packet that [00:29:00] specifically addresses change orders, and the very first line on that sheet says, "We know that you're sensitive to contractors coming in and changing prices.

Mark: We know that. We don't want to be that, which is why we're going to be extremely clear in our estimates." We've actually had complaints that our estimates are lengthy, and they're, you know, they're super detailed, and, "I just needed a price." Well, I can't give you just a price. I'm going to give you a price, but attached to that price, I'm going to tell you exactly what you're getting and not getting with that price.

Mark: So if you're listening today, make sure that you are protecting your profit margin by being extremely clear. And one of our good friends has the famous quote, "Clear is kind."

Scott: That's

Scott: right

Mark: actually being kind.

Scott: So I agree, Mark. So just as we wrap up, it starts at the estimate with the communication between an estimator and a client. Then clear and concise inclusions and exclusions. What are we doing and what aren't we doing? Good [00:30:00] pictures, notes, and a scope of work to the crew leader. And from there, I think we're going to be on our way to a successful project. And if we need to add something, if the client wants it or we run into something, it will be clear and documented and fair, and I think it will help with having a positive outcome, and it won't interrupt an otherwise successful project.

Mark: That's exactly right.

Add Value Without Giving Away
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Mark: And I would also just say a- at every interaction with your crew leader meetings with staff meetings, any time you can talk to your team as a whole, we have to be walking this fine line between educating a- and saying, "We don't give our work away. We have to protect our profit margin. Clear is kind." However, I want you to look for opportunities to add value. Like you said, those small things. While I'm up here, I'm going to dust this chandelier. That doesn't give away our profit margin. Take 15 minutes and clean that chandelier while we have the scaffold up. Change those light bulbs. Do those kind things that are going to set us apart in our customer's mind and above our competition, [00:31:00] but not when we're giving hours and hours away, or giving free coats, or repairing mold that we didn't bid for.

Scott: Exactly right

Mark: It's a great conversation.

Mark: I know every business out there deals with some type of this. I hope it connects with our listeners. If you have any other questions that you'd like to talk about, Scott, do you want to tell them about your free test drive?

Scott: Yeah, we have currently a Taste Of Coaching. If you've ever wondered what it would like to have a coaching relationship, but you're a little bit nervous to-- about the commitment, we have currently an offering that allows you to do just that. We'll put that information in the show notes. Check it out, and if we can serve you and work with you on a short-term basis to see if this is something that would help you in your business, we'd love to talk to you.

Mark: Awesome. Scott, appreciate the conversation. Great talk as always. Appreciate your insights.

Thanks for listening to Success Beyond The Brush!
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Well, that wraps up another episode of Success Beyond the Brush. If this episode helped you rethink how you handle change orders or scope creep, [00:32:00] job site communication, anything like that, go ahead and share that with another contractor who needs to protect their profit margin. For more resources, check out www.consulting4contractors.com, which includes details about a Taste Of Coaching and how to book a free discovery call with Scott.

Check our show notes and video description for more resources. We'll see you next time on Success Beyond the Brush.