Small Firms Ideas Exchange

I like being an architect. I love having my own practice. I adore my office, a scant ¾ of a mile from my house (in Atlanta, this is practically unheard of). I have an incredible passion for the project types that I work on. I delight in a job well done and praise from my clients – I loathe getting paid when client’s don’t hold up their end of the bargain.  I’ve finally figured out a few things:

• Know your client – check out their story and/or references.  If they are on the up and up, they won’t be offended if you make sure they have the ability to pay.
  
• Get a retainer up front (hopefully enough to cover the raw cost of labor to prepare the work).
  
• Don't be too nice of a guy (or gal) and give away tons of work for free.
  
• Learn how to file a Mechanics Lien in your state – get the form and have it on hand.
  
• Find a “black hat” you can have make a few phone calls as your preliminary “collection agency” – it could be a colleague, your accountant, or a business associate, essentially someone who is not internal to your practice and can be objective about asking for the money.
  
• Find a real collection agency you can talk to before you need them – you’ll pick a better one to use.
  
• Don't be afraid to fill out the Mechanics Lien papers and send a copy (via certified and regular mail, of course) along with a Demand Invoice. That gets more slow payments in than any other tactic I know of.
  
• Don't be to willing to walk away from money you earned – unless you know that the time/effort to collect it will be too hard, painful, or if the client is vengeful (may get a claim on your policy – see “know your client” above).
  

Funny, since I have taken the time to educate myself on the topic and get a few simple policies in place, the “bad debts” my firm experiences have declined – sort of like the preparation has emanated a new air in the firm and my clients don’t want to go there. It's like my karate Sensei tells us, “If you’re prepared, there is a much better chance you’ll never need to really use any of this self-defense stuff.” (Thanks, Sam!)

• Omission of one dimension on the drawings.
  
• Engineering consultant locating equipment poorly based on relationships with other equipment.
  
• Contractor “assuming” he knew where equipment was to be located and not RFI or asking at an OAC meeting.
  
• Owner trying to “save a little money” and limit architect’s time on site for observation (when little burrs caught before they wedge themselves under the saddle) and not noticing a potential problem.

• I reviewed with my engineer consultant (tired to limit GC bashing) to come up with a way to not do something stupid like that again and come up with a few alternate configurations that would meet the design intent.
  
• I asked GC how much cost and time to relocate the piece of equipment he put in the “wrong” location (it’s not clearly only his fault, that would be much easier).
  
• I called the owner and apologized (yes, I said, “I’m so sorry we all missed this. Here’s what happened and here’s how we’d like to help fix it.”). During that discussion, the owner also said, “Yeah, if we hadn’t limited your time on site, I’m sure you would have seen it before the concrete was in place.”
  
• During my discussion with the owner, I proposed that we split the remediation cost 3 ways: owner, architect, and contractor.  The owner said that was fair and they “would remember” my willingness to make it right.
  
• During my follow-up conversation with the GC, they weren’t as amenable and wanted it to come out of contingency (a reasonable point but for this owner with a long institutional memory, a bad business decision).  The GC called the owner directly (I think) and said they would do the work but it would be coming out of contingency (I’m pretty sure this was a mistake).
  
• So I deducted my one-third of the remediation cost from my invoice (did ask my engineering consultant for some consideration as well) and I went on down the road. 

I live in Dunwoody, Ga. It is a small community (an unincorporated area of DeKalb County) which is a part of “Metro Atlanta.” Actually Metro Atlanta is 15 some-odd counties which are loosely held together by our infamous I-285 highway. I believe it is the only interstate highway in the county that runs east, south, west, and north… at the same time (AKA “The Perimeter”). 

I subscribe to a lot (I mean a lot!) of online newsletters. It seems businesses are all struggling/grappling with similar conceptual issues. One post I read recently at www.ConstructionDeal.com was along the lines of how to maintain your business; not “maintenance” like change the air filters but how to keep the steady supply of projects.  The article, titled “When to Be Blunt,” essentially believes we can all be nice guys and wait and wait and wait for the word “go” but while we’re waiting, the bills aren’t necessarily getting paid.  The article advocates when to be blunt (of course after initial meetings, describing how you can assist, preparing/presenting your proposal, then how to close the deal).  Ask open-ended questions, then narrow down until you can ascertain when they may be ready to go.  At some point the article advocates asking, “What is stopping you for putting us under contract today?” or “Does my firm have any chance of getting this project?” or the uncomfortable-zone maker, “Can you afford to build this project?”—a nudge like that might be helpful.  In my house (with three dogs and three kids) it’s very easy to be blunt; they all know when it’s time to “finish their business and get off the potty” (or go outside, depending on if they use two or four legs). Anyway, in the past month, I have spent my [nonbillable] time preparing 12 proposals, to have only two proceed to contract.  Of those that didn’t “go,” two have not returned phone calls (nice karma to you too buddy, thanks for wasting my time!), four are on hold pending better economic conditions, three were generic noncommittal responses, and one went to “another architect who is cheaper” but at least that owner was honest!  After that analysis, I’m not surprised at the how they panned out. Realistically, I knew which ones were wasting my time; I just didn’t want to be blunt for starters (hmmm, maybe I should change that).

I was listening to AM radio this morning (ha ha ha; no pun intended) and the reporter was talking about the upcoming anticipated vote on the new mortgage legislation to “fix” the current mortgage crisis. The reporter was speaking with a mortgage broker who essentially said that the legislation will be devastating to his business as it eliminates the “mortgage assistance” provision currently available. He was whining about how of the files on his desk, over half of them would be shut out of the home purchase market because they didn’t have the down payment. Apparently a typical Fannie Mae/Freddy Mac loan requires a 3% down payment.  On a $200,000 house, that’s $6,000. This guy is whining about folks who can’t come up with $6,000 to buy a house? Are those folks really in a position to handle a house and all the responsibility that goes with it? Hmmm . . .buying a house when you don’t have the money, buying more house than you can afford—isn’t that how this mess started in the first place? When will the madness stop and how can the potential homeowner make better decisions instead of hoping the government will tell them the right thing to do?