It can be the toughest choice to make in an overcast remodeling climate: when to say no to a project. Like many of our peers, we have seen a slight dip in sales due to the stagnant housing market, fluctuating interest rates, and a general “tightening of financial belts” by our clients. The six-month backlog of work we once took for granted is now more like six weeks. Fortunately, we've been able to keep our heads above water and keep our valuable staff. But we don't walk with the swagger that we once did — we can no longer turn our backs on the smaller or less-desirable projects.
We have also come to realize that there is a time to “just say no.” There are certain projects, clients, and circumstances where it makes better business sense to decline. These can be the most difficult of all decisions. It's one part instinct that the project doesn't suit our business; one part determination that we're better off without it; and one part nerve that we'll be able to sell other work.
WALK AWAY OR STAY? We recently received a referral from a terrific architect for a couple looking to do a major $1.5 million addition and renovation. We spent an enormous amount of time with the clients and architect during the planning stages, and the couple was enthusiastic about working with us.
There was one hitch: The wife's father was paying for the construction as a gift to the couple. He was a nice enough fellow, but he was also a retired commercial contractor. Coming from a different contracting style than remodeling, he thought he was better suited to direct the project himself, with us acting as the managing contractor. He also wanted us to bid any other subcontract work to companies of his choosing — ones that we had no relationship with and that were commercial subcontractors themselves. He wanted final say in all management decisions.
Because we were already so invested in the project, we initially gave the idea serious consideration. But this presented us with several dilemmas. If we were not the general contractor per se, then who was ultimately responsible for the job, us or the client's father? Who would carry the insurance and the liability? If we were using unfamiliar subcontractors, how could we effectively manage the job? If the father had ultimate control — and he was a natural negotiator — how would we ensure payment? These and many more questions came to us, one after another, after another.
TAKING A PASS We ultimately passed on the project.
It was a tough decision, but the risks of entering into such an unusual and potentially disastrous contractual relationship were just too great. Such a large project would have taken up a considerable amount of our resources and would have required us to turn away other projects from valuable repeat clients. And although we didn't necessarily achieve the same volume, we did have several very successful — and profitable — projects during that time that we otherwise would have had to decline.
We will never know how it might have turned out had we committed to that big job, but we believe that we made the right decision in walking away from it.
I can imagine many of you saying, “Did you give it a chance?” (No.) “Couldn't you have protected yourself with a well-worded and perhaps legally reviewed contract?” (Perhaps.) “How would you feel if you were not able to sell other work and your business suffered — or went under?” (We would have felt like well-meaning fools.)
Our instincts told us that this job was not right for us. Turning work away is always a difficult thing to do and, unfortunately, there is no way to ever really know if you made the right decision. There are so many variables in play that all a remodeler can do is to try to make a smart decision guided by his mind — not his heart or his wallet.
—Todd Virts is vice president of project management and architectural design for P.A. Portner, in Gaithersburg, Md., a full-service, upscale remodeling company. To reach him, call 301.417.0744; e-mail firstname.lastname@example.org; visit www.paportner.com.