Penalty clause with contractor

For a one time job, not likely.

Your best bet is to go the other way and give them a 'bonus/tip/call it waht you will' if they actually do finish on time. I know George Costanza would not agree with this school of thought, but it will be worth it to all parties.

Is NYCMatt also George Costanza?

Yes, I have done this and I think it is important to do unless you want some open ended finish date. I would not enter a contract without a firm completion date and penalty clauses. In the sense of fairness I also add 2 other important clause; 1. The same percentage, (usually 10%) as a reward clause if they finish on time (which they always do with this in), makes both of us happy, and that means 100% finished , no little punch list that is going to annoy me and drag on for months.

I believe it is also important to have set up in the contract a sample of the change order form that will be used. On this it should have the "change order", how much extra it will cost you and most importantly how many days you negotiate that it can add to the completion date, so there is no misunderstanding there of the amount of days you are adding to the job, when you add something that might take a day or two and he wants a week or two longer.

How I usually start the negotiation is after giving the contractors a comprehensive scope of work with drawings, I ask them to study it and let me know there price and timing. They usually give me a very fair (or short) time for the work to be done, that is the length of time that I ask that honor and make happen.

Good luck on your project!

Money pit,

"Never done" is not correct. It is done but it could cause many problems.

1. He said, she said. If anything you do or a manufacturer does to delay the job he will use that as an excuse for why the entire project is running late.
2. What is his fault and what is not his fault?

I personally would never accept a penalty unless i was getting a bonus to finish early. Of course you would have some contractors cut corners to get done early as well. What happens if he is running a little behind but doesn't wan tho pay his penalty? The quality of work will suffer. It sounds like you and the contractor were close to finalizing everything, perhaps the time frame he was giving you was not correct. Can i ask what type of project this is and how long is he supposed to do it in?

We have a penalty clause with our contractor. It has proven to be worthless. He is so far over schedule that he now owes us money, and our job has dropped to the bottom of the priority list. I honestly think he's waiting for us to fire him. Every discussion is fully of empty "I understand....", "X, Y, and Z will be done tomorrow," "the job will be done in two more weeks...." promises and then nothing materializes. If we tried to sue him, I doubt any court would view the total penalty as reasonable even if we can document that it doesn't even fully reimburse us for our continued costs of living elsewhere, storing our furniture, etc. Nevermind the additional costs we're going to incur when we fire him for cause and bring in a replacement.

I'm not sure what we're going to do with whatever new contractor we hire to replace this guy. A bonus sounds like a good idea.

I don't understand why you would give a "gift" or "tip" if they finish on time, isn't that there job to finish on time??? I wish I got a tip every time I did my job and finished projects within deadlines. I guess I thought that was what my salary was for.

I do understand a bonus for finishing early, but on time, give me a break!

ouch lad

911, you have obviously not had too much renovation experience. Or you are a George Costanza....

the key is to have a payment schedule that reflects work progress. the last 10-15% should not be payable until the job is complete.

911turbo, hi I think you got to the point that made it clear for me with the comment in your answer "I guess that is what my SALARY was for".

With GC's they are contractors and the main 2 issues that people request from them is1) a price to do a 2) certain job.

I can understand that when they are about to finnish your job, because they are NOT on an automatic salary they are often madly out quoting for the next job and or starting there next project instead of totally finishing your job.

Which in the interest of getting my job finished, I let them know, do the right thing by me and finish the job and I will gladly do the right thing by you, i.e. giving them a buffer of cash, instead of time away from my job at the end.

I think one of the biggest problems is that contractors know that they are bidding against another contractor and the question always comes up "How long do you think this will take". It is a very important question but are you really getting the right answer? I have met with people that will tell me that their contractor said a project would take 3 weeks. My answer is "Impossible" and sure enough they hire that contractor and I find out later that the project took three months. The contractor is trying to get the job so some will tell you what you want to hear not what it really is. When a potential client asks me how long it will take I tell them it should take 3 months but it will probably take 4-5 months. Projects always seem easier on paper. How long should a bathroom take to renovate? It should take 2 weeks, it will take 4 weeks.

The best way to control the situation is to withhold some amount toward the end of the project. I would not say anything to the contractor until you are near the end of the project and you believe that they will be late and that you feel that it is due to their performance. Make it a substancial amount or something that will get their attention and understand that you're serious and that they will suffer if they don't get their act together.

Play the game the way that they do. This will work.

Conjunction Junction (hooking up words and phrases and clauses) is fine but once you have to go to court, everyone loses in the end. One side just loses more slowly.

Ieb offers the best way to keep a handle on your project particularly when working with contractors, partial payments as milestones are reached. It is the only way for your sanity.

MoneyPit:

1. what work do you plan to do and at what price
2. my contractor can probably beat your quote by a large %
3. call me at 347-485-1402 if you'd like to talk
4, and you're right about the penalty clause
5. otherwise you stand to be eaten alive