# General Business Category > General Business Forum >  bad contractors

## murdock

i was listening to ECR this morning and heard about this...it is people like ashley arumugan who give us contractors a bad name and make i t difficult for us to request a deposit.

considering he has already been paid 90 % of the value ofht the quote over R130 000 into his bank account...this person should have to return the money so they can get a reputable company to complete the job which has a supervised team to complete the project.

i also blame the owner for paying over 90 % of the money and you can see that the job only look about 40 % complete.

i have thought of started a bussiness where we open a account like they do for lawyers where the money id kept by an independent company and paid out on proof of progress to the contractor...the customer would pay the full amount into the independent account and i would first check the progress before paying the contractor...this way the contractor knows the customer can afford to do the job and the customer knows the money is safe until the contract is completed...its a win win situation unless i run away with the money...which i wouldnt be able to do because it would require 3 siginitures to release any money from the account


http://www.ecr.co.za/kagiso/content/...-go-swimmingly

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## Dave A

:Hmmm:  It's actually a damn good idea.

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## AndyD

We work on projects where the architect or consultant acts as escrow. We get stage payments as soon as that stage is handed over or signed off and it's from the consultant or architect with money the customer has paid in advance.

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## murdock

i am thinking of the smaller projects R20 000 - R200 000...where there are not architects and consultants involved.

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## AndyD

With small jobs around the R20000.00 mark, the cost of having an independent company holding and distributing money from escrow would probably be too high to be viable.
From the customers point of view I don't see this kite flying too well. If they control the payment if and when the mood takes them, they're holding all the aces. Why would they want to lose this position and incur extra costs to involve a third party to handle payments? Only on larger projects where authorising, making and tracking payments is a full time job in itself do they have any motivation to go that route.

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## murdock

i think there are more problems with this price range...i have heard of many a person being taken for a ride by the contractor...and builder not paying sub contractors...and customers not paying contractors... in this contract range 20 - 200...more so than higher contracts...i am just talking from experiences with smaller contracts...as you have mentioned the bigger contracts have everything in place like consultants etc...the bigger contracts i have been involved in...where they run into the millions we havent had payment issues maybe because all my contracts have been completed well withing the time frame...so we have never run into penalties either.

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## Dave A

> i think there are more problems with this price range...i have heard of many a person being taken for a ride by the contractor...and builder not paying sub contractors...and customers not paying contractors... in this contract range 20 - 200...more so than higher contracts...


You're spot on - at least in our neck of the woods. I've found the small construction works segment to be a nightmare for payments. I avoid it like the plague at the moment.

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## Retha

We are in property management and experience this problem all the time.  The small contractor is too small to fund the project, so he needs a deposit - but paying that deposit is always a gamble as you never know whether you will see him again.  On the other hand, contractors are having major problems with clients creating excuses not to pay, so even contractors that can afford to fund the work, requires the security of a deposit.
As we manage a trust account in terms of the EAAB, I have also thought along Murdock's lines, but also got stuck at:
1.0  What if the 3rd party is the crook and runs off with the money (not likely if that is his livelyhood and he is registered at a professional institute with control, but in spite of that attorneys and estate agents are defrauding clients all the time).
2.0  The costing aspect - how will you charge the contractor and the client?  Percentage?  Flat rate on the number of payouts?  Perhaps a minimum of say R400 and then a percentage above a certain amount?  I believe something can be worked out, but will anybody be prepared to pay for such a service?
3.0  How to deal with disputes?  Who decides that the work the contractor did was in fact up to par?  Some sort of dispute resolution will be required, however, the third party is going to be in the thick of it at all times and will the fee be able to make that worth his while?
So, after much thought I just gave up.  If someone can come up with a solution that pays, perhaps he can get rich! :Confused:  :Headbutt:

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## murdock

i havent put any thought into it yet as it came to mind as i was typing...as you mentioned there are just tooo many crooks out there..

but about who would decide if the work is up to standard...simple like the consultants who do it at the moment they pretty much have the say at the end of the day...they write the standards and enforce them...and only pay you once they are happy.

it would mean that a lot of the quotes which go around at the moment wouldnt be worth the paper they are written on...because one figue at the end would not cut it...a proper detailed quote with time frames would be a common practice...because this is one of the biggest issues with contractors in the industry at the moment and has been for as long as i can remember...they promise to finish in 2 months and 6 months later they are stil havent completed...shout yeah if you have found this to be true...this one mentioned in this thread is a good example.

why because they take the deposit and use it to complete exsisting projects they are busy on instead of paying for the project the deposit was paid for.

i have seen this on numerous sites...the contractors dumps piles of old wood and rubble on a site to make it look like they have purchased the material...then request a deposit...then you dont see them for weeks...because they use the money to pay wages for their staff to keep other projects going.

the customers are just as guilty when it comes to paying...i had an instance where the customer took a second bond to pay for the work we did...then instead of paying us...he purchased a brand new motor bike with the money....nobody got paid.

when i got chatting to his secretary...she told me he does it all the time...she has people phoning for outstanding money everyday...there should be a notice board for people like this where you can look up peoples names before you do work for them...

i normally check with other companies before i take on new customers...ask around if the person or company has a bad name...for example i was considering doing work for Grid construction because they are all over the place working...i was advised to be cautious...so i decided to stay away.

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## Lyle Comyn

I am a small contractor and will it not be worth having a "trusted or had no prob." info link to this forum that people can check out the good from the ass h**** that give the ind. such a bad name. This will also get more people on board.

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## Retha

Perhaps the managers of the site can consider something like that.  It sometimes even helps to say to a defaulter that you are going to list him on the internet for whatever it is that he is defaulting on.  So if it can be organised (say according to areas, etc.) it may be very useful.  One can then add contractors that you have used and has given great service, but if someone else is not happy with the way they got treated, they can comment.  Something like that....

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## James Carter

Folks. It's all about honouring your workmanship and your level of accountability..

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## Lyle Comyn

James! It is so, This is my aim as well as added value. I have a small but growing biz and at the moment I don't have huge cap. The prob. is that it only takes 1 con man along the line and I have lost a lot of biz simply cause soon as I ask for dep. I get told to piss off and "not a nother one!". To go get a loan to cover this is madness. The con man will give ref. of 10 bogus people and is the pot. cliens doing to phone NO or if so it is his brother sister ex.

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## murdock

i am considering writting a book on my 20 year experience in bussiness as a small contractor...and boy have i heard it all...from why payments have not been paid...to promises of bigger jobs if i just fix one or 2 things while doing the quote...to promises of bigger jobs if i do the little jobs at a good rate...to i will see you right on the next project because there was no profit on the one we just finished...man i have heard it all and learnt to move away from certain companies which drain me physically and mentally...i thought i would loose a lot of money...but in fact make more profit now for less time on site...and i get to see my family more.

let this be a warning to small contractors...those bigger contractors who you sub contract to dont drive 2 million rand cars and live in 5 million rand houses because they lost on the last project you did...it because they manage to con small contractors like us into doing the work for nothing or a t a rate well below what they are making 

i will give you an exampe i use to do the entire contract for a company from the tender right to the commissioning...so i knew how much  profit they were making...and the cheek of it would be that the owner of the company would still tell me he lost so much money on the project yet..one contract in particular we turned over just short of a million rand...my bill to him R25000 total...the profit on one of the panels that i installed was more than my total bill...so like i said just becareful  of these big comapnies...some of them thrive on your hard work and time away from your family...and i talk from  experience i have been given a second chance with my little one...no amount of money will keep me away from her...my older 2 are all grown up and i dont even know what their teachers names where...because i was working away for long periods of time making other people rich.

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Retha (08-Feb-11)

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## Olderwagen

I know nothing about building except where my mom got run in by a small contractor.  He ran off with all her money and a job half done and she ended up having to take out an additional loan on her house to get the job completed using another company.  

I agree with murdock and think he has a great idea going. Maybe you can get a lawyer that sets up a trust for each project and it will work on the same principal as when a child is a minor and money is kept in trust for them. The money is only released upon receipts submitted and then only for the amount on the receipt. The details of commission can be worked out with the lawyer. Then on the question on who will establish whether the work was done according to what was in the original quote..Isn't there a Master Builder Association that might buy into this idea and appoint someone specifically for this task? This could mean money and opportunities on both sides.

Also, the place to go and complain?  Try hellopeter.com . Some stories you read there are horrific.  I personally feel all companies should register there and handle their complaints in a public way.  Imagine the government departments being registered on hellopeter.com........

Well, that is my two cents worth.  I say GO FOR IT and good luck!

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## ava_camen

very good strategy  :Smile:

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## Retha

Without wanting to change the direction of the thread, I think another challenging form of 'small contractor' is the 'painter' 'tiler' 'builder' that you pick up at the paint or tile shop.  He quote you a price and you accept.  Say it should be three days work.  At the end of the first day he wants to draw against the work he has already done.  He will want a third of the contract money.  He will point out that the work is done and you should pay him for it and he has expenses, etc.  You say: 'No, what about you not coming back tomorrow!?'  He says:  'I am leaving my tools here, so I must come back'  You give him the money (if you don't, you will have a very unpleasant exchange!)  So tomorrow he doesn't pitch.  Next week he will come round to pick up his tools - and just try to stop him taking it!

I now tell them beforehand (and let them sign!) that he will only receive enough for bus/train fair at the end of the day.  He must tell me how long it will take and I then allow another day or so (otherwise he can take ages, and still get the money out of you).  He will then only get the balance when the job is finally done to expectations. 

The problem is that if he just thinks that he is a tiler, you will have a problem with getting a decent job done!  :Confused:

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## Lyle Comyn

why is there people i buzz and why is the chap standing at the door? If the man was trustworthy he will not be there and has nothing to loose, not even his name. He knows that the person has not got a contractor in and this person is looking at "saving" a couple of cents. This the person an easy target. This chap is a con. and smooth with the mouth. He makes his money not by doing a job but by conning the lady coming out the door and at quick glance sums it up and if you come out with tiles his a tiler and if you have paint he paints and if you got it all he can do it all.
His work is often not fin and gets to your home and checks this out to.
A week later you broken into. Use this chap and get what you pay for, cheep rip off and do the people in that has a name and something to loose.
YOU GET WHAT YOU PAY FOR.

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## murdock

and 2 weeks later your premises are broken into...using registered contractors who pick up labour on the side of the road also create a safety hazard for you premises...been contracting for many years and noticed a trend....we have a quiet period with breakins...one neighbour in the pan handle has his thratch roof repaired within a short period of time one nieghbours house is broken into and the others vehicle is broken into.

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Retha (08-Feb-11)

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## Retha

Yes, I have also noticed that trend.  If there are building activities, etc. going on in the neigbourhood, the risk increases exponentially!

We buy at a tile place where they provide you with a tiler on their panel.  You pay the tile place for the tiling when you buy the tiles and they provide you with a slip you must sign when the work is completed to your satisfaction and you must then give this to the tiler.  He submits the slip and gets his money (with their commission deducted) from them.  In the two instances where we have done it like this, we have had the best ever standard of tiling.  The tilers complain about the lower rate they get, but it is still worth their while and there is very good control over them.  They also work fast, which is a bonus.

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## AndyD

I can see why this would be a tempting way to go but I'm not comfortable with the tiling shop taking what is no doubt a large percentage and not bringing anything of real value into the equation. If the tiles started lifting after a couple of weeks would they accept responsibility seeing as the job was done with their products and their approved labour? I doubt it.

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## Dave A

> If the tiles started lifting after a couple of weeks would they accept responsibility seeing as the job was done with their products and their approved labour? I doubt it.


If the contract is between the client and the tile supplier including the installation, then surely the tile supplier *would* be accountable. The fact that the tiling guys used subcontractors shouldn't be the client's problem.

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## Retha

In a way the tiling shop is acting in the capacity we were discussing in the beginning of the thread.  Someone holding the money for both parties, having a measure of control and getting paid for it.
I had no problems yet with the tiling so cannot comment on any guarantees.  I think that part of the system is that if a tiler would make a mess, he would be taken off from their panel!
And they do take a fairly large chunk, but it is still worh my while and that of the tiler!

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