Am I out of line??

[XLexusTech]

to the OP, not out of line in my opinion, this is a significant financial transaction and if you cant get what you expect when promised then their is no reason for you should not setup a contract... No reason @ all... if the shop doesn't want to sign up.. move on.. you are paying good money and providing a good timeline that everyone agrees to then their should be no problem.

I bet their is more then a few people who ordered from NRE who wish they had this up front..

[ccracin]

Originally Posted by 71RS/SS396

I know zilch about the specs of Mario's engine but some of the boosted stuff we do is so specialized that there's only 1 vendor that makes the part you need so you're stuck with them for better or for worse and they don't just keep this stuff on the shelf, it's made to order.

What good does the contract, po,....whatever you want to call it do for me? If the guy runs out of money taking him to court and losing more money is a waste of time and money since he has no money to pay. From my point of view there's nothing but negatives with a contract because it could be a sign of someone that is going to use the contract to avoid payment or sue you later. We just finished an engine that the guy micro managed and changed his mind for what he wanted at least 5 times during the build so we had to go back and redo some things more then once, he would call everyday and sometimes multiple times a day, I didn't even charge him on some of the redo stuff or all the phone time and then he bitches about the labor bill at the end and wants to negotiate it, we made no money on the engine, he was not happy, so no one won,
. If I had a contract I would likely still be sitting on yet another engine someone didn't want to or couldn't pay for and could be in court trying to defend myself for doing what the guy asked for. I'm not saying Mario would do this but there are people who would so imho it's best to just avoid the potential headache.

Tim,

I understand what you are saying for sure. I think one of the issues is you may not have a clear understanding of the PO process. It is a two way street. The terms on the PO including Payment terms more importantly for you are there to protect both parties. The contract requires the customer to pay for goods and services rendered. Court is not always the only course. You can also turn claims over to collections. you get money and they get the job of chasing the customer. Quite a few people move when credit rating is threatened. That being said, you are correct, if taking this route or court is not something you are willing to do, then the contracts mean nothing for either side. If you look at Marty's post, that is how most of the business world works. It seems this car industry has it's own set of rules. With the examples you gave above, why are you still in this business doing things the same way. It's always been said that people that continue to do things the same way and expect change are in for a huge disappointment. Rather than than abruptly saying I don't want your business if you show up with a PO or contract, a simple negotiation could really pay off. When you are talking these highly specialized, expensive engines it would not be out of place for you to ask for an escrow account be setup at a bank that can be drawn on when milestones are hit. Also, when the customer changes his mind, you send out revised quotes and receive revised PO's or whatever you have in writing. Verbal deals are the dangerous ones. Communication, documentation and general good business practices will go further than anything.

All that being said, I hope you don't take my comments in a negative way. I am simply trying to add perspective from outside the car world because it truly runs on its own set of rules it seems. I love this industry and hobby and do not want to see it crash from bad deals and people loosing tons of money on these bad deals. Customers or vendors. I am by no means an expert and am only providing my opinions. You guys are one of the most respected shops in the industry and I respect what you have to say on the subject. Hopefully just these exchanges will help educate some people allowing them to have better experiences in this community.

[71RS/SS396]

Originally Posted by ccracin

Tim,

I understand what you are saying for sure. I think one of the issues is you may not have a clear understanding of the PO process. It is a two way street. The terms on the PO including Payment terms more importantly for you are there to protect both parties. The contract requires the customer to pay for goods and services rendered. Court is not always the only course. You can also turn claims over to collections. you get money and they get the job of chasing the customer. Quite a few people move when credit rating is threatened. That being said, you are correct, if taking this route or court is not something you are willing to do, then the contracts mean nothing for either side. If you look at Marty's post, that is how most of the business world works. It seems this car industry has it's own set of rules. With the examples you gave above, why are you still in this business doing things the same way. It's always been said that people that continue to do things the same way and expect change are in for a huge disappointment. Rather than than abruptly saying I don't want your business if you show up with a PO or contract, a simple negotiation could really pay off. When you are talking these highly specialized, expensive engines it would not be out of place for you to ask for an escrow account be setup at a bank that can be drawn on when milestones are hit. Also, when the customer changes his mind, you send out revised quotes and receive revised PO's or whatever you have in writing. Verbal deals are the dangerous ones. Communication, documentation and general good business practices will go further than anything.

All that being said, I hope you don't take my comments in a negative way. I am simply trying to add perspective from outside the car world because it truly runs on its own set of rules it seems. I love this industry and hobby and do not want to see it crash from bad deals and people loosing tons of money on these bad deals. Customers or vendors. I am by no means an expert and am only providing my opinions. You guys are one of the most respected shops in the industry and I respect what you have to say on the subject. Hopefully just these exchanges will help educate some people allowing them to have better experiences in this community.

I have quite a bit of business experience and get what you are saying and don't take offense to it but we are a small 2-3 man shop and the administrative time involved in what you are talking about wouldn't be cost effective to keep altering po's every time someone wants to change something. We purposely keep our crew small to reduce overhead. Imo the escrow means nothing unless we had access to the funds which would make it pointless to have it then. We won't work ahead the money because I'm not getting stuck with someones half built engine or parts anymore, if you don't pay that week then the engine is going to sit until you do. I have no idea of your knowledge level of an engine of this caliber but the piece price can get pretty insane on this stuff, 1 example I can give is the pushrods we use on a high boost engine are $1000 a set. You can see why I won't finance peoples parts any more, the cost adds up fast in a week alone depending on where the build is.

[syborg tt]

I've set up about 5 shops with some billing documents. That one day will be converted into software.

Page 1 - Project Scope (Engine Build, Chassis, Sheet Metal, Parts)

Page 2 - Hard Part Costs (I encourage the owner to do this)
- I know some shops like to buy parts because they can make a small profit but the time spent doing is hard to bill. Especially when the parts come in wrong and don't work.

Page 3 - Estimated Labor Costs

Page 4 - Project Creep
If you do this then you need to consider this.
ex. If you move the firewall back, then you need to consider what will be in the way under the dash. (I can give plenty more)


Then there is a weekly sheet that is mailed to the customer. It has an Invoice, Escrow (whats left ) & most important Weekly Hours & What work was performed. Every week the customer gets this document and he must have a minimum agreed upon dollar amount in the account for any work to be performed.

If the account goes below then the project is put on hold. If after two weeks the account hasn't been brought to the agreed upon value then Storage charges can be charged.

The Customer has the right to come get the car and bring it back when he has money to keep the project in motion. If a car is taking up space in a shop it's not earning money for the business owner and both parties get frustrated.

[71RS/SS396]

That is a fair way to do it Marty. The only thing I disagree with is the buying of the parts, not because I make money off of them but because people often times either buy the " equivalent " or order the wrong part. I make very little if anything off of the parts and can pass my discounts on to the customer.

[syborg tt]

Originally Posted by 71RS/SS396

That is a fair way to do it Marty. The only thing I disagree with is the buying of the parts, not because I make money off of them but because people often times either buy the " equivalent " or order the wrong part. I make very little if anything off of the parts and can pass my discounts on to the customer.

I agree with the statement "equivalent" that can be dangerous. If they are ordering say the full DSE or Ride-Tech catalog then it's safer for the shop owner to not have to buy them.

Point being if the part was ordered wrong then it's the customers responsibility to spend the time to ship the parts back, reorder the correct parts and deliver them to you.

It also give the customer ownership in the project as to what the car cost to build. There is no sticker shock when you order the 10,000 dollar DSE front stub with brakes and then charge them 20 hours to install it. If they have already spent the 10 and you charge them only 1500 to install it they feel like they got a fair deal. It's a mind game.

Just like when the wife goes shopping and buys something that is 90 dollars she tells you it was on sale and she save $100.00.

But when Car Guys & Gals buy parts the cost is the cost. We never look at it as we've save money.

[Steve Chryssos]

This is so painful....

The alternate view is not saying that contracts are bad, escrow is bad. It is simply saying that:

Race engines are not roofs. A race engine builder is not the same as a roofer. And don't try to split hairs or wax philosophically about a race engine vs a custom high perf engine. A TT 540 is not the same as the engine in yer Camry.

Judges understand roofs. Judges do not understand $40-$50K TT540's. A smart experienced engine builder will already have been though the wringer with one or more litigious customers. It's usually the customer who makes a 5th to 1st downshift at 100mph resulting in valves bouncing off pistons. That customer type, like the judge who might decide the case, JUST DOESN'T GET IT.

As a result of the above, smart experienced engine builders choose their customers carefully. This proposed contract, no matter how sound it might be, will make a smart, experienced engine builder wary, so.....

Invert that train of thought: The engine builder who does sign the contract might not be smart and experienced. Which leads us to ------->

Find a smart, experienced professional engine builder. Ask for a written estimate on official company letterhead with terms, then demand an invoice with terms before forking over your deposit.

[syborg tt]

Well Said.

Originally Posted by streetfytr68

Find a smart, experienced professional engine builder. Ask for a written estimate on official company letterhead with terms, then demand an invoice with terms before forking over your deposit.

[ccracin]

Originally Posted by streetfytr68

Find a smart, experienced professional engine builder. Ask for a written estimate on official company letterhead with terms, then demand an invoice with terms before forking over your deposit.

X2 I think this is what have been trying to get too. The problem is, there too many vendors in this industry that play buzz word bingo and have more excuses than solutions. It makes it oh so difficult for those of you that try to do it right.

Speaking of this, I will give Steve much credit. He is one of our vendors and an excellent one at that. I would not consider having to have a contract when business is done like he does it. In fact, our order changed mid-stream do to issues with one of Steve's vendors. He informed us of it, refunded us that portion of our money and found a solution for the issue. That is why our truck has his Muscle Drive/Shrifter setup in it! SIMPLE!

[Dayton]

What you don't want to have happen is hand over 40 large to a vendor. The vendor then uses this money to pay his overdue bills, and, complete other overdue projects.
Then, for your job to be completed, the vendor needs more new money.
I have lived in this scenario.