Materials and Finishes: When the Client Wants to Supply Them
As a remodeler or residential contractor, it's your job to ensure that construction projects run smoothly from start to finish. That means controlling everything from procurement to scheduling, construction, and budget to fulfill your client's dream and manage the total cost of the project.
But home renovation is also a collaborative process involving input from designers, trade partners, and the homeowner.
Obviously, their input is essential. It's the client's home, and it's up to them to choose the finishes, like tiles, flooring, fixtures, etc. And they have a designer there to help guide that process.
But what happens when the homeowner wants to step in and take charge of purchasing the materials instead of just selecting them?
Why Homeowners want to supply fixtures and finishes
Residential renovations have come a long way since the days of trades just picking out and installing fixtures from material suppliers. Now, clients can visit a showroom to view selections and then go home and price shop them online, often turning to Amazon, Home Depot, or another home center to look for a "better price."
That's when you, the general contractor, hear the homeowner say, "We will just buy the materials ourselves."
Clients often go into a remodeling or custom home-building project with a fixed price in mind, and they think that using owner-supplied materials will help them gain control over the budget, manage material costs, and reduce the overall cost of the project.
However, doing so can put the overall success of the entire home construction project at risk.
The Different Components of Procurement
Procurement seems like a simple process to anyone looking in from the outside. But, as a professional general contractor, you know there is much more to it than just purchasing tiles or flooring.
Procuring items for a home renovation or custom construction project involves managing many complexities like:
Measuring: Accurately measuring the spaces where the fixtures or finishes will be installed.
Ordering: Ensuring the correct amount of materials are ordered based on the measurements and factoring in waste.
Shipping: Managing shipping times to ensure the items arrive on time according to their installation schedule.
Staging and Logistics: Managing the storage of materials when they arrive based on criteria like weather sensitivity, limited space, and security issues.
For example:
Bathroom Plumbing Fixtures are ordered simultaneously, but only the items needed for rough-ins, like shower valves, pedestal tub faucets, and wall-mount faucets, are delivered first because they are required for the rough-in phase. Final fixtures like sinks, toilets, and tubs aren't needed until later and will just be in everyone's way - and are at risk of being damaged or broken if delivered to a jobsite long before they are needed.
Hardwood Flooring is highly susceptible to weather and moisture conditions, and having it delivered when the home is being drywalled puts the wood at risk of absorbing too much moisture, which will cause the flooring to contract and buckle later on, resulting in additional work and extra costs to repair it.
These are logistics that homeowners don't know about and aren't considering when they ask to purchase materials on their own. If they do make those purchases, and the materials are damaged or broken, it creates a messy situation on how to warranty them, as you shouldn't be assigned the replacement costs for materials you didn't supply.
Why You Need to Control the Procurement Process
Think of a residential contractor as a quarterback.
A quarterback is responsible for calling all the offensive plays and ensuring the rest of the team is in position to execute them. When a homeowner hires you for a new home build or to remodel their existing home, they need to understand that you must be responsible for the entire project to ensure it's executed successfully.
Procurement is one of those elements, and there are four key reasons why you need to be in control of it.
1. Schedule: You need to manage the complete schedule
A client's home isn't a storage depot, and your team can't be dodging fixtures and finishings while framing, drywalling, or tiling. Understanding when materials need to be ordered and delivered is part of the master schedule that you need to be managing.
There's a significant risk to the budget and timeline if materials are ordered too early and are damaged or broken from being left on site and need to be replaced. As well, what happens if your client ordered incorrectly and your trade shows up to find the wrong or insufficient amount of material to complete their work? More than likely, this will add to the total cost of the project.
2. Warranty: If you didn't buy it, you can't warranty it
Assume that a flooring delivery was received at the job site while it was being taped, causing the wood to absorb the moisture in the air. When it eventually evaporates in the wintertime, those floors will contract and result in unsightly gaps between the boards.
Clients won't know this information, and the salesperson at Home Depot wants to make a sale, so they will process and deliver the order to the homeowner. But when those floors eventually contract, who do you think they will call?
Yes, that's right, you.
3. Budget: The client doesn't actually save money buying it themselves
Homeowners don't know the intricacies of calculating the quantities of materials needed for a renovation or custom home-building project. They don't have any experience with ordering deadlines, shipping times, the logistics involved in receiving pallets of materials at a job site, staging, quality control, or any of the other myriad of details involved in procurement.
A mistake anywhere in that process will increase the contractor's costs and end up costing the homeowner more money.
Years ago, I had a client who insisted it was a good idea to order all the ceramic tile for their job themselves. They didn't order enough for the ensuite shower, and the additional tiles took four months to arrive by boat. In the meantime, the rest of the job was completed, but nothing else could be done in their primary bathroom until those tiles arrived.
Not only did they have to live with an unfinished bathroom for months, but any money they thought they were saving by supplying their own tiles was spent paying for change orders for the necessary trade partners to come back and finish the job and for our company to come back and do site protection and manage the work.
4. Profit: This needs to be part of your pricing model
As a general contractor, one of your primary goals is to run a profitable business. And the markup you charge on materials drives up your gross profit margin, contributing to your business's success. (Learn more about how to set the proper markup and margin for your residential construction business.)
If you aren't purchasing the materials, you can't charge a markup on them, which means you're losing your ability to contribute to your company's overhead and net profit. Providing a superior level of service to your clients depends on you being profitable on all construction jobs.
How to Discuss and Handle Objections About Procurement
During the upfront sales process, it's important to remind clients that everyone is working towards one common goal: a successfully completed job. And that can only happen if the person (or team) with the most experience and understanding of the remodeling process is in charge.
That's you.
When a client suggests that they want to be involved in purchasing materials for the job, explain to them why they can't:
It's not just about buying the materials.
It's about managing the quantity and delivery of materials to minimize the potential for damage and the impact on the overall schedule and budget. Because extra materials hanging around a job site are a nuisance that no contractor wants to navigate.
Let's assume your client wants to buy a sink from Home Depot, Lowes, or Amazon, which arrives damaged. If the return window has passed or the item is out of stock, how will they navigate replacing it? If the project isn't at the point in the schedule where that sink can be installed, then that new sink has to sit on a job site, risking damage - and getting in your team's way until it's needed.
And if the client doesn't replace it immediately, they have no guarantee of being able to secure it. Or they may end up with higher replacement costs for that same item - especially if they bought it on sale the first time. This means they've expended a ton of wasted energy and haven't saved any money.
Remodelers know how to troubleshoot problems.
If you've spent any time remodeling bathrooms, you know that pretty much one out of every five shower cartridges is defective in one way or another. And you know how to deal with that situation. But a homeowner won't know what the problem is, who to call, and how to rectify it.
And if you aren't being paid to manage procurement, then it shouldn't be on you to fix it.
They hired a professional for a reason.
Your client isn't a professional home builder. That's why they hired you. The things they don't know about how to procure materials will cost them more money in the long run.
When The Interior Designer Wants to Get Involved
A home renovation is a group effort involving input and work from multiple people - including designers. After all, they are the ones that help make the home you've built look HGTV-ready.
But sometimes, either at the client's request or for their desire to add a revenue stream, a design partner will insist on handling the procurement process for fixtures, finishes, and equipment (FF&E) - not just the soft goods like furnishings and window treatments.
Designers have experience ordering materials, but the same rules apply concerning warranty, ordering, staging & logistics from above. But the bigger challenge is actually a pretty simple concept. In project management, the further away a task is from the company accountable, the more risk there is for error and additional time and cost.
When it comes to procurement, removing the contractor's task of ordering some of the materials creates a fragmented process, causing frustration in the form of additional time and cost if everything doesn't go as planned. And if you've been in the residential construction industry for any length of time, you know it won't.
It also creates a grey area regarding responsibility for what the contractor vs. designer needs to purchase, and very often, this leads to misunderstanding and errors in the process.
As someone who has lived this firsthand for many years, I can say that anytime you split a task, it creates a handoff, and handoffs should be avoided if you're looking to improve efficiency.
It's Your Team, or It's Not You
When a client hires you, they hire your team and all your processes - including procurement, to manage all the moving pieces in their project and keep their best interests at the forefront. It's essential to the successful outcome of the project.
The best way to ensure everyone is aligned is to include conversations about procurement in your upfront sales process and document them in your construction contract.
Review your policy on procurement with clients when reviewing your written contract.
Call out that process often in the pre-construction phase.
Give examples of "what can go wrong" to help clients understand that they don't know what they don't know and how that can cost them in the long run.
There's an old expression about too many cooks in the kitchen spoiling the broth, and that same theory applies here. To ensure your clients are happy with their experience and the completed job, they need to let you do what you do best. If they can't, then they are not your client.
A successful renovation or any new construction requires an integrated approach where all parties work towards the same project outcome: a well-built home.
I created the BUILD AND PROFIT SYSTEM to help residential contractors and remodelers run profitable businesses by implementing rock-solid processes and systems to ensure you aren't assuming the financial risk for situations that are out of your control.
Click the button below to learn how the BUILD AND PROFIT SYSTEM can help you build a solid sales process that protects you from unnecessary financial risk.
