Protocol & Performance
Online Home Study
PAYOUTS & PURCHASES (PART 2)
(PLEASE, TAKE QUICK BREAKS IF YOU HAVE TO)
Always Remember - GOING THE DISTANCE Means "Achieving Objective!"
In Part 1, we really dug in pretty deep, especially about the fallacy and over-simplification of “all else” (what is needed) as just “Materials.” We have uncovered the fact that “Materials” are literally 1/12 of relative project requirements in the “what is needed” category. We have identified the necessity for making a clear distinction between disbursements for “time & labor” (abbreviated as 'labor') and those for “what’ is needed” (all else). In so doing, we have categorized one as “PAYOUTS” and the other as “PURCHASES.”
Therefore, at this point, since we conclude that the phraseology “labor & materials” is both inaccurate and obsolete, hopefully, we can now agree on not settling for using or considering that sort of vernacular as valid or as an accurate description of projected disbursement demands. Instead, it is our truest hope in this regard that we consider disbursements for “ labor” as “payouts,” and that which is for “what isneeded” as "purchases." These are two separate things which should never be bundled into one sum of or bid for money.
Subsequently, towards modification of our phraseology, we can define any cost/expense required for project fulfillment as the forecast of the sum total for “labor & what is needed” rather than for just “labor & materials”).
"Shortly, I will complete this crash course, but my distance is a lifetime of making the safest and wisest investment decisions on measurable-identifiable costs/expenses."
Payouts & Purchases (Part 2)
Please Study This Lesson In One Sitting
Caught? Then Get Rid Of Them!
*In addition to this, it is not recommended that we settle with the satisfaction of "proving" our demand for accurate and specific delineation of the situation to contractors. We must continually prove it, savor, and actively reinforce how right we are by not settling for just "being right." Some people, after "catching a contractor in the wrong," are satisfied with the contractor saying something like "Okay, You've got me!" Then what happens? The resident's chest wells up with pride for showing the contractor that he/she was "on to him," (whether it was for lying, stealing, or some other breach) but is, ironically, "stupid" enough to keep the contractor on the job. Get rid of him! Poisonous snakes do not suddenly become "Garters!"
Fine! The person compliments you for being so perceptive about things, then you are so flattered that you settle for just that person's acknowledging your intuitiveness. Subsequently, upon taking the bait, you release the pressure for this person's accountability towards always being very specific about where and for what the money is requested? Would you actually do that without insisting that they continue to be specific and truthful about anticipated costs for "labor" and anticipated cost for "all else?" We most certainly hope not! This is how most private home decision makers of reported contractor improprieties get "hit:"
*By means of their condescending in the face of well-placed flattery attributable to their "remarkable intuition" or other "assets."
It follows that part of our aspirations and expectations for guiding ourselves into the future is not only through changing our viewpoints on certain things, but, through conscientiously changing our vernacular consistent with those viewpoints since it factors into reinforcing who we are, how we think, what we do, and how we do or don't do it. As important as it is for us to do what we say, it is equally important for us to say exactly what we mean. Situations always work out best when one is complementary to the other.
Nevertheless, this firmly in mind, we can see that what is called a “bid” is actually sub-divided into two parts: the costs/expenses entailed in “labor” and those with respect to “what isneeded.” As before, these are respectively identified as “PAYOUTS & PURCHASES.”
Pay-outs & Purchases = Negotiable Bid
Although to some, this can appear a bit too overzealous, you most certainly have concerns for knowing where your leverage appears in order to successfully negotiate a counter bid. Oh yeah, “a counter bid.” You do this through subdividing the bid into …
- Projected “pay-outs” for “labor”
- Projected “purchases” for“what’s needed”
We are talking about “before” the fact. Hypothetically, it is doubtful that you would agree to doing 2 million dollars on your private home project when “what’ is needed” totals only in the area of $200,000 (all taxes included), and the projections for “labor” are lower or about the same. For sure, you are really in no mood to invest million dollars on a $ 600,000.00 project.
“What? A Six-Hundred-Thousand-Dollar project?”
Sure! How would you know that someone is charging you 2 million dollars for a project which is literally worth only $600,000.00? We are taking into consideration factors such as “labor,” “what is needed,” and the $1,400,000 “percolated gross profit” the company or contractor gets to keep (albeit only a small percentage goes to taxes)? So you pay 2 million dollars and up the ante of the contractor’s gross profit to in the area of 1.4 million dollars when that could have been reduced to only $200,000.00 had the project been finalized at the actual investment rate of only $600,000.00.
Now, does this make any sense to you? It shouldn’t.
Here is the clincher: When you do not invest time for serious enough inquiry to learn about the ACTUAL cost/expense probabilities in both “labor” and “what’ is needed” (individually, then collectively), you have no bargaining chips with which to negotiate a successful counter bid DOWN to a rate which is most realistically reasonable and fair to you, first; then, to the contractors you are paying.
For emphasis and reiteration: when you proactively ensure that you have a well-informed grasp of what the actual payouts and purchases can be for each of your projects with consideration to “labor & what is needed” ( each in its place, then cumulatively) you are then in the perfect position to exercise any allowable latitude you discover you have to enable you successfully counter bid DOWN to a more reasonable rate. In this case, if instead, the contractor's bid was for only $600,000 (instead of 2 million), but you itemize projected expenditures for what is needed in relation to labor and found them to be cumulatively only $200,000, by how much would you counter bid DOWN?
Answer: At or slightly above $200,000. It is then the contractor's option to either take it of leave it. Your option? To negotiate a mutually acceptable difference nearest to $200,000 or decline since you lose leverage the moment you submit to a noticeably exhorbitant rate.
A truism: one contractor’s refusal is another’s jubilee!
1. Bonus Download: Leveraged-Legal Forms For US Homeowners
*Please always offer contractors whom you have not thoroughly checked out, the “SERVICE VALIDATION” form. Please thoroughly check them out or assign this to assistants [This is especially so for seniors and their caregivers to first do/arrange) VALIDATE! No advances on anything. Advance payments of any sort are not recommended. If contractors cannot afford to launch your project without requiring "shopping money" from you, it is very likely they are having money-management issues which can spill over into your lap. The best contractors normally can afford it and offer installment plans. But always be alert to relying on these factors alone as signals of "reliability." This is why it is recommended that you conduct a full and proper service validation of ALL contractors. There are many impostors. Proper service validations help uncover them.
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End of lesson for Day 9 – Payouts & Purchases – Part 2
Tomorrow: Day 10 – Firing – Part 1
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PAYOUTS & PURCHASES - PART 2
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