Hilliard Contracting, Raleigh, N.C., ran on trust and goodwill until late one Friday afternoon in 2002, the year the company became Big50. Owner Steven Hilliard had just met with a client whose whole-house remodel was about 75% complete. His purpose was to deliver the unfortunate news that their project, which they had hoped to do for $220,000, was on schedule to cost closer to $330,000.
“I hadn't been out of their house for more than 20 minutes,” Hilliard says. Then his cell phone rang. “They just blew me out,” he recalls.
Hilliard's mistake was not having a formal system for documenting change orders. He was doing the project on a time-and-materials basis because the clients — who had never remodeled before — were too anxious to get going to hash out the specifications necessary for a fixed price.
Hilliard had warned the clients that the time-and-materials approach carried some risk, given that costs tend to rise as the project unfurls, and that allowances are typically exceeded. And he had explained his monthly billing process, which, he says, “they never questioned.”
Until that day. Then they were furious. “‘We trusted, you, Steve!'” he recalls them saying. “They loved everything I had done until that point, and then it was like I dropped a bomb on them.”
The project ended amicably, largely because Hilliard says he “ended up eating some of [his] time” and he worked out a payment schedule. But it was enough to alert him to the fact that clients don't always fully understand how changes will affect their bottom line. Now when his clients request a change, Hilliard has them sign a change-order form that notes the initial contract amount, the scope of the change, and how it will affect the final price and timeline. “My lesson was that I had taken the trust thing for granted,” he says. He's grateful for the wake-up call.