John Bleasby
Tell us “What Would You Do?” and you might win a DeWalt cordless mitre saw
Canadian ContractorOur latest business dilemma contest finds Mitch’s carpentry crew working for a rich kid, acting as his own GC, breaking all the rules
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What would you do?
Mitch and his three-man carpentry crew are working on their largest renovation project ever; fixing up the old Henderson mansion for the new owner. It’s a 4,2 acre estate with an iron security gate, completely hidden behind trees. Mitch figures his guys will be there for several months. Mitch’s crew are just one of the many trades on site: an electrician,a plumber, a mason and a roofer are all coming and going.
The owner, Ryan, owns a large tool and die company with contracts all over the world. With 500 employees, it is the town’s largest employer. Ryan, son of the founder, is as brash and arrogant as any 32-year-old kid who has ever been made heir to a vast fortune. Ryan is acting as his own GC on the project. He pays Mitch for time and materials every other Friday, based on Mitch’s invoices.
Mitch has a serious dilemma with his wealthy young client!
Mitch and his crew were, in fact, called into to replace another carpentry firm that Ryan kicked off the job. “They forgot who is the boss here,” Ryan told Mitch. “Don’t you forget, OK?”.
Interior walls have been removed, ceilings torn down; even an exterior brick wall of the kitchen has been blown out to make way for a garden greenhouse that Ryan’s wife wants.
Although Mitch is working to an architect’s design on all this, Mitch has learned that Ryan has not obtained a single building permit. When asked about this, Ryan waved Mitch off: “That’s none of your concern, Mitch. And if anyone comes around, I know a lot of people on Council, and they’ll look after me.”
Mitch is worried that if there are any problems, his firm could be in trouble. Furthermore, given the time Mitch has blocked off for this job, he’s afraid that even a short site shutdown could leave his crew unemployed and unable to find work for a while.
What should Mitch do?
1. Continue working and trust Ryan’s confidence and connections.
2. Tell Ryan that he cannot continue the project unless there is a building permit.
3. Ask Ryan to give him sort sort of guarantee or compensation should the site be shut down.
4. Report Ryan’s project to the town in order to preserve his reputation as a by-the-rules operator.
5. Talk to some of the other sub-trades on site and ask how they feel before making a decision.
6. Some other course of action (explain)
Send your responses, along with a brief explanation directly to:
jbleasby@canadiancontractor.ca
Deadline for entries: December 15th
The winning entry wins a
DEWALT (DCS361) cordless mitre saw (retail value $499)
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That is a very good question indeed – one that I find myself thinking about, regarding similar situations, often. My first reaction would be to prepare a letter and either a) have it sent registered mail or b) ask him to sign a copy – identifying that you understand that there aren’t any permits associated with the project and should the project be shut down as a result of a lack of permits, you will be compensated for all work performed as well as a reasonable amount to cover costs associated with leaving the project – be it temporarily or otherwise. Perhaps coming up with a sliding scale – i.e.: we are owed this much should the project be delayed one month, this much for 1 to 3 months, this much for 3 to 6 months etc. would prove helpful in stressing the point. I see a client having an issue with signing such a document, in that they’re kind of signing a blank cheque. Who knows what the costs will be and who would accept such terms? I’m embarrassed to admit, most of us wouldn’t risk losing a project by introducing such an awkwardness between us and our client. It’s a real shame that we feel obliged to accept this risk and to not rock the boat. We recently spent almost 4 years working towards starting a project and the owners just decided to buy up the street – a house that doesn’t require renovation – rather than to proceed with their project. We do not have any recourse at all for all of our time and energy spent on this project. We were actually turning work away in anticipation of starting this project and, as a result, spent the last few months slower than we have ever been in years. As we’ve discovered, taking someone to court for such an item and winning, doesn’t mean that you will be compensated – it only means that you’ve won. Tell that to the bank and your subtrades.
I would take the time to review not having a permit with the other sub trades and let them know my intentions as how my company would proceed.
I would then have a meeting with Ryan and review the reasons it doesn’t make sense to work without a permit on the project
1) The cost of taking out a permit is minimal
2) Having work inspected by a licensed inspector can catch new code changes and helps to make sure nothing is missed during construction
3)Working under a permit will help to assure future buyers of the property that work was completed properly so help raise resale value
4)If any issues arise such as leaks / fire etc the insurance company may look at the recent renovations and as they are not permitted work refuse to pay out on any claims.
If Ryan would continue to insist that a permit is not necessary we would have to thank him for the work to date and look elsewhere for work.
Although a large project its not worth loosing the working relationship built over many years with the local inspectors.
Since the owner (Ryan) would have no problem financially to pay for the necessary permits there would be no reason not obtain them. Obviously he thrives on showing his authority against the authorities.
More importantly it’s the law and for the contractor (Mitch) it’s the right thing to do and he would be setting a good example to the other contractors working on site.
6. I would talk to Ryan with some figures worked out before hand and try to persuade him to get a building permit, tell him if the site got shut down he would need to get one anyway. I would tell Ryan if the site was shut down it would end up costing Ryan above and beyond the price of the building permit in the first place. The risk isn’t worth taking.
I would have to call a stop work for my crew until inspections are completed and permits are provided. Permits are in place for a reason be they safety, security or otherwise.
Mitch should send an anonymous tip to the authorities and be prepared for the inevitable work shutdown. Once Ryan has obtained the necessary permits, he will have no reason not to have Mitch and his crew finish the work.
2. Tell Ryan that he cannot continue the project unless there is a building permit.
1) Attempt to reason with the client (Ryan) that for the minor cost that the building permit (as compared to the overall project), there are many added benefits of going through the proper channels i.e. the guarantee that the work will be inspected by a qualified professional whose interest is making sure the work is done up to code, that he will get the added value of quality work for his money.
2) Offer to work with him to assist (where possible) in the process of getting / applying for the building permit.
Mitch should definitley do his research to understand the risks involved without permits. If indeed there was more risk than Mitch should take on professionally or personally he should discuss with Mitch in a reasonable and professional way convince Ryan that the risks are to high for the company and him personally. Mitch should be real careful not to insult or make Ryan feel stupid with his response.
If Ryan does not care about the risk then I would suggest he find another customer that does.
Mitch is taking a big chance replacing a previous contractor that had problems with the owner. I would suggest that he gets Ryan to sign a contract for the work he requested him to do detailing all that is involved as well as the progress payment structure. Do not wait until the end of the project to get paid as all kinds of red flags can come up as obviously Ryan has had problems before. There is more too it for Ryan. He is now the prime contractor and is responsible for making sure WCB is being paid for the people involved in his project. The list goes on…Liens…insurance…permits ? Many people believe you don’t need permits. Ask him if he is trying to hide any code infractions and why. The permit is to protect him and future buyers that the building is safe to occupy. Why would you not want to get a permit? Question for the electrician. Are they getting a permit as I would not want to jeopardize my relationship with the inspection authorities over one job? The city has the address on file so you are not fooling them. They know how many rooms, if the basement is developed or not, etc. We used to call these people “moonlighters” remember? They work under the radar for cash or cheques signed to the person not the company with no permits. If you want to be a due diligent company insist on the permit if not you have lowered your standards to accept any job no matter if it is legit or not. Mitch’s choice!
Mitch should have had a contractual agreement that states the owner of the work is responsible for all permits. We’ve come across this many times over the years as a GC whereas the homeowner or owner of the project doesn’t want to apply for permits, for whatever reason. In our contractual agreement it states that they are responsible for all permits and I tell them that I and my sub trades will apply for all relevant permits at their demand and if not they sign off on their intent. Clearly Mitch should have laid out some ground rules before starting work, but at the same time he is not the GC and he is only supplying carpentry work as a sub trade. So as it sits he isn’t required to apply for permits, that would be the house builders responsibility. If the builder is paying on a regular basis and he is comfortable with the arrangement he has to decide whether or not he wants to risk a work shut down because of non permitted work. Mitch also at some point knew Ryan did not have the proper permitting in place and should have objected at that time, instead of continuing to work for Ryan.
Good Luck Mitch your probably going to need it.
I would tell Ryan the owner to apply for a building permit , it is in his best interest to have every thing inspected. Need to shut the job down or get out of there till there is a permit. In this case the risk is not worth the reward. If something ever happened because of electrical as an example, without permits & inspections the house insurance would be void.
If GC is “braking all the rules” answer #4 is the right answer.
Report Ryan’s project to the town.
#2 Tell Ryan that he cannot continue the project unless there is a building permit.