An important part of setting expectations with the client before the project starts is to define “substantial completion” and its relationship to the final payment being made.
At substantial completion, the project can be used for its intended purpose. For example, while there may be a cabinet handle, or the like, on backorder, the client can still use the remodeled space as it was intended to be used.
You should address with the client which thing (or things) are outstanding and agree on what those items are. Agree upon the value—the cost—of each item, then add up the costs and double that number. That amount is what will be deducted from the final payment, which is made once substantial completion has been achieved and the client is using the space.
After you see to it that the agreed-upon items are taken care of, the client pays you the money that was held back.
It’s essential to have language in your contract that addresses everything above. Be sure to review this part of your contract with the client when she is signing it. Why? So you avoid the client holding back your final payment because of a missing cabinet handle!
I hope this three-part blog series helps you to be more successful in working with your clients to set expectations regarding closeout before the job actually starts.