The One Who Holds the Gold Rules
For years, Lang Masonry’s biggest customer was John Stillwell. He was a wise, older general contractor to whom I grew quite close. When we would discuss a change order, scheduling conflict, or any other issue on one of his projects, he would remind me there is a Golden Rule.
“I hold the gold, and, therefore, I rule,” he would say, with a halfhearted grin. It took me many years, scratches and bruises to learn how right he was. I think I finally got it.
The one who holds the gold rules. Is it fair? That’s debatable. Is it true? Pretty much. Often, when there are issues on a project, unless you control the money, someone else is controlling you and the outcome of the situation. To put yourself in a better position, you need to find a way to “hold” the money yourself.
It has been almost a year since I dissolved my steel erection company. During the process of trying to collect money owed on projects we had completed before we closed the doors, a customer sent me a deduct change order for $18,000. We had done the steel erection on a high-profile project for his company. The crazy thing was that the deduction he presented was for steel panels that were damaged after my company was completely finished and left the site.
I asked the customer how he could justify sending my company a back charge more than a year after we finished the project, without informing us there were any issues while we were working on the project. We all know there is a thing called the “punch list.” I asked him, why didn’t you mention this at punch out?
He replied, “You should have known something was wrong when you never received your retainage in time.”
He then went on, “This is the same amount the general contractor is back charging my company, so there is nothing I can do to fight this. If you want your final payment released, you need to sign the change order (deduction) and execute the final waiver of lien.” That was the end of that conversation.
Remembering what Mr. Stillwell told me years earlier, I came to terms and conceded. Right or wrong, my customer “holds the gold.” I was working for the steel fabricator, the SF was working for the general contractor, the GC was working for the construction manager, and the CM was working for the owner. My company was so far down the pecking order that, when someone above messed up, even though I am was not at fault, there was no way I was getting my $18,000.
There were just too many gold holders above me. Wanting to collect the remainder of the money he owed on the project, and knowing it would cost more for a lawyer than I could get in return, I signed the waiver and sent it back. Like that, someone took my gold: 18,000 paper greens of it.
Consider one of your projects where the GC is supplying the materials, and using your company as a masonry subcontractor (SC). If the GC’s project manager never got the samples approved in time, making the brick four weeks late arriving to the jobsite, is the GC going to tell the CM or owner it’s his fault? Or, will he require you as a SC to catch up the schedule? He may even threaten to access any late penalties his company receives on down to your company, if you don’t complete the brickwork in time.
You may believe it isn’t always as bad as I am making it sound. In most cases, you are correct. There are many owners, CMs, GCs, and SCs who are honest in their dealings, and give a fair shot to those at or near the very bottom. However, if you continue to remain at the low end of the pecking order, in a subservient position, the odds are that sooner or later, you will take the hit for issues you never created.
If at all possible, you (and I) need to find a way to hold the gold on a project. Buying the materials yourself, instead of working for labor only as a SC, will move you one layer up; working for the GC, instead of a SC, will move you up two layers; and working for the CM, instead of the GC, will get you up three layers. Working directly for the owner, four! If you are the owner of the project, well, you got the gold! Every layer you can move up puts you one step closer to “holding the gold.”
I closed down my steel erection company where I always seemed to have had to work at the low end of the pecking order. If you ever decide to start doing steel erection, give me a call for advice first. With my four functioning companies, we are doing all we can to get as close as possible to working for the original customer, or being the original customer. That way we can give ourselves a better chance to “hold the gold.” Thank you Mr. Stillwell!