When exactly is a punch list finished? At the Orren Pickell Remodeling Group in Chicago, conflicting answers to that question have led some clients to withhold the final 5% of their payments. “You might have a customer withholding payment because of a window crank that was back-ordered,” says Lisa Pickell, the company's remodeling group manager. “On a $1 million project, that's a $50,000 window crank.”
To head off such disputes, Orren Pickell restructured its draw schedule. Contracts now call for the last payment of 20% at final inspection rather than 15% at final inspection and 5% at the completion of the punch list. The company will also insert a holdback clause in the contract or negotiate a reasonable holdback at the client's request. “That way you look like you're doing them a favor,” Pickell says.
Fewer draws reduce the company's receivables, which helps improve loan terms. Pickell says the restructured draw schedule is not about simply collecting money —it is part of a broader effort to change customer perceptions about the close of a job. The company also introduces a polished, service-oriented maintenance crew at final inspection. Pickell hopes this step will create a sense of closure for the homeowner, signaling that the job is finished and that punch list items should be considered regular maintenance rather than the final stage of the project.