Owner-Supplied Materials

Last week we heard from a user whose had used Goldenseal estimating software to print out a detailed, itemized estimate.  The client then used it to buy a bunch of cheap-o construction materials, and wanted them to be credited against the amounts in the estimate (which included markup).

I thought about past jobs from Turtle Creek Carpentry, and this was not often a big problem.  But then again, there was that fixed-price job in Boston to build an oak stairway and banisters. The client offered to  buy raw materials, and then got a deal on hard maple in random widths and lengths, and gave me those instead of my list.  I was stupid enough to keep the same price, and soon found out that hard maple is reaaaallly hard, and the fine grain required much tighter tolerances. Everything took 3x as long.

Despite that, Goldenseal does not have a stock contract clause for owner-supplied material.   We will add one soon.  Problem is, it’s just data in the Starter files, so the change won’t help users who already have an existing file.

The user sent us a detailed owner-material clause that he has used in the past, but it’s very long, so he didn’t use it for this client. Contracts are always a balancing act between covering all the possible contingencies, and keeping it simple enough to not scare the client.

So, here is what we suggest you add as a clause in your contracts:

The client may provide material only with prior written consent from the Contractor.

To add it, follow these steps:

  1. Choose Contract Setup from the Options menu, and choose Contract Clauses from the submenu.
  2. Click the New button.
  3. Type Owner-Supplied Materials into the Name field.
  4. Copy/paste the above text into the Clause Text field (or type in your own text).
  5. Click OK, then click Done.
  6. Choose Contract Setup from the Options menu, and choose Contract Packages from the submenu.
  7. Open any packages that should include the new clause, and add it to them.

If/when you give consent for owner-supplied materials, then it’s time to write up a long agreement. It will really depend on the materials and job, but you might want to include some/all of the following clauses:

  1. List the specific materials to be provided?  Or allow Contractor to review the list, before items are ordered?
  2. What happens to overhead/profit on the materials?  You probably want to keep it the same, or reduce it only partially.
  3. Who is liable if the materials are defective?  If not plain old standard stuff, it probably should be the client.
  4. Cost of delays if materials are not provided promptly?
  5. Handling cost for unloading etc?
  6. If unusual materials, adjust the labor cost to deal with them?  It may even need to become an Allowance or Change Order.

Author: Dennis Kolva

Programming Director for Turtle Creek Software. Design & planning of accounting and estimating software.