Protocol & Performance
PAY-OUTS & PURCHASES (PART 2)
(PLEASE, TAKE QUICK BREAKS IF YOU HAVE TO)
In Part 1, we really dug in pretty deep, especially about the fallacy and over-simplification of “all else” (what’s needed) as just “Materials.” We’ve uncovered the fact that “Materials” are literally 1/12 of relative project requirements in the “what’s needed” category. We’ve identified the necessity for making a clear distinction between disbursements for “time & labor”(abbreviated as 'labor') and those for “what’s needed” (all else). In so doing, we’ve 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 project disbursement demands. Instead, it’s our truest hope in this regard that we consider disbursements for “ labor” as “payouts,” and that which is for “what’s needed” ... ... "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 forecasted sum total for “labor & what’s needed” rather than for just “labor & materials”).
*In bonus to this, it's 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, bask in it, and actively reinforce how right we are by not settling for just "being right." Some people, after "catching a contractor in the wrong," they're 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 don't suddenly become "Garters!"
Okay, so the person compliments you for being so perceptive about things, then you're 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 isn’t only though changing our viewpoints on certain things, but, as much, through conscientiously changing our vernacular consistent with those viewpoints since it factors into reinforcing who we are, how we think, and into 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's equally important for us to say exactly what we mean. Situations always work out best (positively speaking) when one is complementary to the other.
So, with this firmly in mind, we can see that what’s called a “bid” is actually sub-dived into two parts: the costs/expenses entailed in “labor”and those with respect to “what’s needed.” 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 (first off) through subdividing the bid into …
1. Projected “pay-outs” for “labor”
2. Projected “purchases” for “what’s needed.”
We’re talking about “before” the fact. Hypothetically, it’s doubtful that you’d agree to doing 2 million dollars on your private home project when “what’s 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’re really in no mood to spend 2 million dollars on a $ 600,000.00 project.
“What? A Six-Hundred-Thousand-Dollar project?”
Sure! What's meant by this (being allegorical, of course), is, why should you know that someone is charging you 2 million dollars for a project which is literally worth only $600,000.00 dollars considering “labor,” “what’s needed,” and the $200,000.00 “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 only $600,000.00.
Now, does this make any sense to you? It shouldn’t. It’s rhetorical mumbo jumbo. But, notwithstanding the incongruity, this will … …
Here’s the clincher: When you don’t make serious enough inquiry into and learn about the ACTUAL cost/expense probabilities in both “labor” and “what’s needed” (individually, then collectively), you have no bargaining chips with which to negotiate a successful counter bid DOWN to a rate that’s most reasonable and fair to you, first; then, to the contractors you’re paying.
For emphasis and reiteration: when you’ve got a well-informed grasp of what the actual payouts and purchases can be for each of your projects with consideration to “labor & what’s needed” ( each in it’s place, then cumulatively) you’re then in the perfect position to exercise any allowable latitude you discover to successfully counter bid DOWN to a more reasonable rate. You could then see that the project bid at 2 million dollars requires only around $200,000.00 worth of “labor” and only $100,000.00 worth of “what’s needed”. Your counter bid, please?
A truism: one respectable contractor’s refusal is another’s jubilee!
1. Bonus Excerpt from "Power in the House! - M.S.E." (Chapter 17)
2. 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. No advances on anything.....
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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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