Construction projects go over budget all the time. Generally, when giving a quote, you try to add a bit extra in. You may quote at 10% over what it should actually cost, for instance. This way, the customer has already agreed to the higher number if you need that money for anything.
But you can’t always make this work perfectly. What if it goes over the budget? Is the customer going to refuse to pay, claiming they only agreed to the initial quote? Have you broken the contract by going over that budget?
Who was at fault for the overage?
The biggest question is simply who was at fault. That will help to determine who has to cover it — if the client has to pay more or if your company is going to absorb the financial hit.
For instance, maybe you quoted far lower than you could actually do the project for simply because you wanted the job. If it then goes over that quote — which you knew it would — the client may feel like they were deceived.
Most of the time, though, the client was responsible in some way. Perhaps there was hidden damage in the home that had to be fixed. Maybe they changed their mind about something — like a specific material — after you put in the bid.
The key is to clear every one of these costs with the client along the way. Explain why the cost is higher than anticipated and ask them if they want to add to the total bill or make other changes to lower costs elsewhere.
What if you experience a real problem with your client?
If you still wind up in a legal dispute with your clients, there can be tens of thousands of dollars on the line. Be sure you know what steps to take to protect your interests. It’s often wisest to consult an attorney at the first sign of trouble.