The client may always be right but if they are slow in making key decisions or if they decide to change previous choices, your schedules and profit margins could be at risk. When late or indecisive decisions impact not only one schedule but also the timelines of your other projects in the field suddenly you are stuck between a rock and a hard place. No matter which way you spin it someone ends up unhappy with how you handle client induced project delays. While the best scenario is to never get to this point there are some best practices in charging clients for delays while maintaining the client contractor relationship.
Should you charge for client delays?
First you need to decide if charging for client delays will help your business curb costly late client decisions. If your clients are unaware of deadlines, what decisions are coming up, or how to let you know what their choice is, then you likely have a communication problem that charging your clients will not help fix. Additionally, if your schedule delays come from changes in project scope you may be better off setting and communicating scope deadlines earlier in the planning process. But if you clearly lay out and remind clients of selection deadlines and they still are unresponsive, then giving them an incentive to make choices on time might be the right move for your business.
Pros and cons of charging for delays
The pros
The pros for charging your clients for their delays on selection decisions are straightforward. You incentivize your client to make their decisions on time. This, in turn, helps more project decisions be made on time which preserves your schedules and margins. When properly communicated these charges can be implemented as guardrails to help your client’s project be completed on time and on budget instead of an additional fee to be paid.
The cons
Charing clients for their delays can cause frustration and rifts in the client contractor relationship. Depending on when these charges take place you may have to deal with or try to salvage the relationship during the rest of the project. An unhappy client may also hurt your chances of getting a referral for new business. While these are valid concerns to keep in mind, many can be avoided by properly communicating these charges in advance with your client.
How communication can maintain the client contractor relationship
To achieve the best and avoid the worst aspects of charging clients for self-inflicted delays you need to be upfront in communicating your fees, fee structure, and fee timing in your proposals and contracts. But more than just including this language, you should make it clear and obvious with initial signature lines on the page in question or next to the specific verbiage. In addition to this, you should remind clients of upcoming decisions, deadlines, and impending fines.
How CoConstruct can help
Thankfully construction management software can help you manage the client contractor relationship effectively and efficiently. CoConstruct has customizable construction proposal software that allows you to build in fee structure language for clients to receive, review, and electronically sign. When it comes to implementing and receiving delay fees from clients, CoConstruct’s change order software lets you easily create and issue your clients a change order totaling their delay fee which can be approved over email, paid for, and then automatically updated on your budget.
Even better than helping you on the backend, CoConstruct can help curb client delays before they start. With their own dedicated client portal, clients can login and always see where their project currently stands and what decisions are upcoming. Automated reminder emails also help clients known what and when decisions are due to encourage them to complete their part of the building process.
Client-induced delays can be costly to your project and to you and your client’s relationship. But when introduced and managed correctly, they can be a great incentive to keep your projects on track and your clients engaged.
