6 Warning Signs of Problem Construction Clients

by:
on April 19, 2016

If you’re a residential or light commercial contractor, you’ve probably heard one of these statements:

“My brother-in-law is a carpenter and says you’re charging double of what it should cost.”

“I’ve talked to seven contractors and none of them know what they’re doing.”

“We can’t pay the advance, but will pay in full when the work is done.”

Every construction business will face difficult clients at some point. Beyond stressing you out, working with a tough client has other unwanted side effects, including:

  • Profit loss
  • Client service delays
  • Dinged reputation
  • Health-impacting stress
  • Business closure
  • Bankruptcy

Fortunately, there are several red flags that can indicate if someone might turn into a problem client during the project. When someone displays one or more red flags, consider passing on the job or charging a premium price to make the inevitable hassles worth your time.

Read on to learn the six red flags to watch out for in clients.

1. Arrogance: The know-it-all type

Arrogant clients believe the job is so easy that they could do it themselves if they had the tools and time. They might claim someone told them what the job should cost and how long should it take to complete. After you present them your cost and time estimates, they might even threaten you with bad reviews about your business or complaining to the Better Business Bureau (BBB) that you’re overcharging.

Their unrealistic expectations and know-it-all attitude causes them to undervalue your expertise. And a client that doesn’t trust you is a difficult one indeed—it’s usually best to pass on such projects.

How to deal with arrogant clients: When the client threatens to take action on you, the best route is to pacify them. The BBB has published advice on what to do if this happens to you, but here’s a summary for your quick reference:

  • Apologize for any inconvenience caused and try to solve the problem.
  • Use empathetic and reassuring language, such as “I understand why you’re upset” or “We’ll do what we can.”
  • Stick to facts and emphasize that your company is dedicated to its customers.

2. Anxiety: Horror stories of contractors past

These clients list out the many other contractors before you who apparently didn’t know what they were doing. Even worse, they might brag about firing a contractor for shoddy work.

Bad contractors do exist, and people do have terrible experiences working with them. So, a client telling you about a bad experience with another contractor is not an immediate red flag. But past problems are a sign to dig deeper!

How to deal with anxious clients: Anxious customers are wary of trusting you since they’re haunted by horror stories of the past. First, ask questions to determine if the issue was a one-time problem caused by an inexperienced contractor, or if there’s a pattern of failure caused by unrealistic client expectations. If it’s a trend, that person could turn into your next problem client.

The way to deal with such clients is to assure them that they are in good hands.

Sharing your business’s success stories and positive customer reviews is a good way to build trust with these customers. To achieve this, you need to have an effective reputation management strategy. This involves creating an online presence, actively soliciting reviews from customers, and responding to negative reviews.

3. Extreme haggling: A dollar here, a dollar there

It’s OK for clients to seek discounts, and it’s understandable if you wedge more margin into estimates to cushion your profits from such requests.

These requests enter the problem territory when a client haggles over small (or too many) items or expects you to throw in non-scoped work and upgrades for free. This client might argue about the $15 here and $7 there, or ask you to explain why you’re choosing one material over another when the difference is only 4 cents per unit.

Besides being annoying, they eat up your time!

How to deal with haggling clients: One way to counter extreme hagglers is to set a discount policy. Offer a percentage or dollar amount off on the total project cost and refuse to engage in lengthy discussions over line items. Good clients accept and respect this type of boundary. Problem clients don’t.

Also, write detailed estimates, contracts, and pay schedules. That way, a client knows what to expect up front and you don’t have to rely on memory if a problem arises—such as the client expecting you to perform work you didn’t agree to. Use estimating software to price jobs, scope work, and organize supporting documents.

4. Dishonesty: Ignores permits and standards

Filing for permits is no fun and takes time. But you’re running an ethical business and want to be hired because people trust that you do good work.

The repercussions of failing to get necessary permits can have legal dimensions too. Northwest Florida Water Management District fined real-estate developers a whopping $112,400 for failing to procure an Environmental Resource Permit.

How to deal with dishonest clients: If a client insists on skirting some permit or code requirement to save money or speed up a project, it’s a cue to walk away with your integrity intact. However, as an ethical contractor it is also your responsibility to educate such clients about the legal and financial consequences of skipping permits.

To be clear of any suspicious behavior, you can create a contractual agreement of obligations a client needs to fulfill on his/her end. These obligations should include clauses that mention that the client has the necessary permits for the construction. This would save you from any legal hassles, in case the client tries to implicate you on behalf of his/her rogue behavior.

5. Incessant nagging: The never ending contract revisions

Asking for contract revisions is another demand that is sometimes OK, but can quickly become a problem. If someone wants you to change or remove clauses related to payments and arbitration, it’s a red flag that they will be a problem client.

Payment and arbitration clauses are in place to protect both you and the client. If someone wants to change the language in such a way that your company takes on more risk, it may be a sign the prospective client plans to withhold payment or file a claim against your business.

How to deal with nagging clients: Contractors know that it’s not unusual for clients to request changes to original construction contracts. For instance, a homeowner might demand changes in the materials used to build a pavement or the position of a window.

Contractors that issue change orders based on verbal agreement with clients are asking for trouble. Instead, contractors must document changes to a project’s scope and get the owner to sign and approve the costs of initiating a change. To make creating and tracking change orders easier, you can use construction project management software to automate the change order process.

A final word of caution: If you don’t know how a proposed change could impact your business, consult an attorney. Otherwise, clients should agree to the terms of your contract.

6. Indecisiveness: Difficult to figure out what they want

Indecisive people who aren’t sure about what they want are the polar opposite of the arrogant types who try to dictate every step of your job. Unfortunately, they can be just as difficult to work for.

These clients do know what they don’t want, but don’t know what they actually want. As a result, they’re unable to provide precise enough feedback to ensure the end product is something they love—especially on new build and remodel projects. When clients don’t communicate their desires or requirements clearly, it’s nearly impossible for you to figure out how to please them.

This is risky because you could deliver something they don’t like. The indecisive client will become a dissatisfied client, who can cause financial problems and hurt your reputation.

Indecision without the presence of other red flags isn’t necessarily a reason to pass on a job, but it does mean the client might need you to spend more time explaining things and guiding them toward decisions. So, budget for that extra time in your estimate.

As always, careful estimating, planning, and documentation of every agreement can help if issues arise.

How to deal with indecisive clients: The key challenge to overcome when dealing with indecisive clients is late or lack of communication. And while there’s little you can do if a client refuses to communicate, being a bit proactive does help.

To ensure that you actively communicate with clients, you need to decide the means of communication. The ubiquitous email always works, but you can take this a step further by using construction project management software with built-in communication capabilities.

Conclusion: Your gut senses a problem

Maybe you’re unable to put your finger on it, but have a feeling that someone will be difficult to work for. It’s OK to use that gut instinct to make a decision.

There’s a saying that you don’t lose any money on jobs you don’t take. Turn down a job without regret if you’re uncomfortable taking it, especially if you notice other red flags.

If you ignore the uneasiness and accept the job anyway, just make sure the estimate and contract details are in writing so you can refer to them if the client becomes difficult.

Despite best efforts, problems with clients can still occur. When that happens, refer to the estimate and contract and other documentation to remind the client (and yourself) what both parties agreed to.

But remember, there’s always a way around even the most problematic clients.

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