How Is Your Firm Dealing With Shortages and Price Hikes?

We have always given "allowances" for everything with a range of pricing based upon a level of brands/materials required and try very hard to stay close to what is estimated. Once materials/products are selected by the client and the plans are finalized, then a proposal is presented. I have shorted the time frame in which Proposals are accepted and deposits required by creating a sense of urgency. Once I have the deposit in hand and the check clears, If we don't order the products/materials immediately and the pricing increases, we can usually absorb a small increase. However, I also state in our contract that the estimated costs may not be the actual cost incurred.

We're fortunate that we have well paying clients who demand an exacting level of performance, quality and materials; in most cases they are very understanding of what things cost and the increases they are seeing across the board. I simply tell anyone trying to put the onus back on us for absorbing increases, "Do you want ME to pay for your home improvements or landscaping, or do YOU want to pay for your own home?". This pretty much shuts up any further discussion.

Since these are not change orders, we don't add a percentage to any increases so as to keep those at a minimum.

As the contractor, designer and project manager I diligently submit articles to my clients that express all that has been mentioned here in this article. That helps to keep them informed and that, "its not just me "saying it"! I provide receipts for materials to show them costs. When I have materials that are back ordered I copy them on the notices for timelines. I prepare them by letting them know my subs are booked out so they may not be able to get back on their project immediately. Furnishings, lighting, plumbing etc. may also be back ordered. It's about directing them to surrendering to what is going on, its a reality that none of us want to deal with but it is real. Find humor, empathy, patience and strenghth. Contracts are written based on total cost, design & project management fees are paid up front.

Most homeowners have heard the news about the crazy price increases and shortages, but we do have a conversation with them about the reality of present supply-chain issues to drive that knowledge home.

Our system has always been not to start any project without confirmation that every piece and part is in-hand or reliably on the way in the time frame needed. Our contracts have no allowances; everything is specified. On fixed price agreements, there is now an escalation clause.

I tell folks that it is better to be patient BEFORE we start, for the greatest assurance against delays in the middle of their project... and they always agree with that rationale.