Painting Businesses think time and material is great. Time and Material-In a nutshell, don’t do it. On first glance this seems like a win-win situation. Usually when there is a job that is difficult to estimate due to unknown factors contractors will fall back to T&M; because, they believe they are safe. They reason to themselves and the customer that if they estimate they may be higher that it really is. And they tell the customer that they will save, etc, etc.
Often enough there are jobs like wallpaper removal, where it is impossible to know how the paper was hung. Did the paperhanger size or prime the wall, or did the put the paper directly on the cheap builder paint. Painting contractors who have been in business long enough will have experienced this. The nicely sized wall with strippable paper might take only 2 hours; where the unprimed wall with extra paste might take 8 hours. And I don’t like working for free, so we all at one time or another think we struck gold when we “come up” with this idea.
As you work this plan you can and usually do make money. Sometimes you make more money even charging the same rate, as you do when you estimate a job. This is a real eye opener, when you are charging the same rate per hour T&M, as you do to prepare your estimate. At the end of the day you wonder, is it my estimate that is wrong, or are the painters slacking off?
An even bigger eye opener is when your customer agrees to T&M with your hourly rate, and you go merrily along working. The end of the job occurs and you present the bill, and the customer faints. After she wakes up she says no way did she envision that the small wall paper removal in her powder room would cost her $400. She is semi hysterical, and you say, “Mrs. Smith you were here, and you saw that we only took a small break at lunch time and we didn’t goof off, blah, blah. You are beginning to whine, and she is unmovable. She comes up with some figure that she will settle on. By now you are going crazy yourself because her number means that you or one of your employees will be making no money.
How did it go wrong? You say. T&M is supposed to protect you. Instead you work for next to nothing.
The idea is fine until you do a job that really takes a lot more time than expected, which is exactly the reason for T&M. The customer is all too happy to take the T&M when it works in their favor; but, will protest until you give in. Saying, the wallpaper removal cost 2 times as much as painting the master bedroom.
What went wrong? You did. For whatever reason, be it a lack of historic job costs or laziness, or lack of faith in your estimating abilities, or that you wanted the job so bad that you knew you would get it, if you didn’t disclose what the T&M could possibly add up to be. So many times it is better to walk away than lose.
The best solution for the problem is to sit down and complete a real estimate. And if it means going a little higher than it might cost just to protect yourself, then do it. At this point the customer can either say yes or no. They know up front, and won’t be unpleasantly surprised by some really high number. If they say no, then you can feel good about yourself knowing you are not giving your work away. Ultimately the pressure is on the contractor, and the way around this is for you to keep records on some of these jobs that were nightmares. Giving the customer a firm price is really is the only way, make yourself a promise that you will stick to your estimate. And make that promise to the customer. Saying that, you will never come to them and ask for more money, and that your price is your word. Their eyebrows will go up when they discover a contractor that won’t come whining for more money.
Then the pressure is on them. Take it or leave it.