Thread: Job cancellation penalty ?

Have any of you ever put a job cancellation penalty clause on the quote? Obviously it would have to later be put on real paper, signed and agreed to by all parties paying the bills.
Say the job requires adding a new piece of equipment that you might not buy otherwise, possibly 5-6months of work, and $10-15K in material. Seems some safety is required if it gets canceled.

So I figure it definitely has to cover any materials ordered before cancellation.
Then would you throw in another 10% or something to cover machine inconvenience and hassles related to that ?

Anyone here ever manage that?

I had one customer a few years ago that wanted to put $ penalties on a job if the monthly quantities were not met and wah wah, I don't remember quoting it though.

You can always try your luck,........ but IME when a job's cancelled (for whatever reason) your chances of actually getting paid (no matter what the contract say's) for ''doing nothing'' are on the south side of slim

IMO, it's a perfectly common and reasonable thing to do. Even if it's only buying stock, if the job gets cancelled, they pay. If it's a contract and they're not going out of business, why wouldn't you get paid? That's why we have contracts and courts.

If it is possible, especially on a longer lead time, large material bill, get the material cost and outside process costs + 20% up front, then the most you might be out is your labor.

You have at least covered your costs, plus a little for the logistical stuff youv'e put into the job, IE: transprotation, paperwork, phone time etc.

I try to accomplish this, not always sucessful, but worth a try, the buyer "should" be on board with shared risk.

I'm sure others with much more exp. than me will have some better ideas.

D

Yes perfectly normal. Some big players like the yelloe earth moving company have even suggested we put it in there. Nobody wants to put someone else out of business.

Athack

Originally Posted by athack

Yes perfectly normal. Some big players like the yelloe earth moving company have even suggested we put it in there. Nobody wants to put someone else out of business.

Athack

The first law of parasites.

Originally Posted by Cornilsn

The first law of parasites.

also a common trait in humans who have empathy.

Somewhat related -

Do any of you running shops work in a cash up front or at least a deposit on the work to be performed?

I do this with some of my products. Its the de facto sales exchange for a retail business. Why does a service business take the shaft and only get paid at completion of the work.

Just wonderin. I'm no expert by any means.

Brent

I still say-

Wherever you have the little guy V big corp situation.;- You can put whatever you like in a contract, actually collecting money due on said clause is another story.

If they want to pay, all fine and dandy, if they don't,...... you're as good as wasting your time trying to get it.

I do Pro Forma some customers because they never pay otherwise. One asked for a discount for money up front so I put the price up 10% and gave him 5%, he was over the moon (so was I ). If you are reading this and your name is Harry from Colchester, you are the man, thank you

Third Party Billing. I deliver loads that are done this way quite often. The customer orders the material and has it shipped to the manufacturer. The customer is billed for the material. I think it's a CYA deal. Also a good idea cause you can justify it by them receiving the material specs as well as you. You CYA by matching product to material shipments. They know you made it from the correct material(as spec'd and supplied) so any material problems are between them and the supplier.

If it's a government job forget it,"They would gladly repay you Tuesday for some hamburgers today".

Ben