Archive FIRE.04: file fire.04, part 1/1, size 21605 bytes: ------------------------------ Cut here ------------------------------ Lines Words Characters File 387 3723 21324 fire.04 (c) 1991 John De Armond All Rights Reserved This article first appeared in Midnight Engineering Magazine ------------------------------------------------------------------------------
The nightmare is finally over. On November 11th, 6 months to the day from our fire, we moved back into our house and office. It's been a LOOOONG 6 months. This article will wrap up my coverage of this disaster. I'm going to talk about dealing with the contractors and wrap up a few loose ends.
Dealing with the contractor.
Dealing with your reconstruction contractor can be one of the most painful experiences of having a fire, ranking right behind dealing with the insurance company. As I mentioned in the first article, the first contractor we had was brought in by the insurance company. Not surprisingly, it turned out to be a disaster. We fired this guy and hired another. Our second contractor proved to be much better, though even this one proves the old maxim that if you want it done right, do it yourself.
I realized after working with this second contractor that there are no hard and fast rules, no formulas that one can use to select contractors. This company came with sterling references and a good reputation and yet I, an amateur carpenter, could have done most of the work better. The contractor was more than willing to fix anything I complained about but just about everything needed at least a little bit of complaining. I found out from talking to others that my experience was better than average. It seems like you just can't get good craftsmen anymore.
Nonetheless, let's go over some rules for selecting a contractor.
* Ask for and check references. If possible visit the referenced work and talk directly to the responsible parties. Look critically at the work. Ask specific questions such as "What work had to be re-done?" and "Show me some work you are well pleased with and then show me some work that you feel is substandard." It is very important to look at work considered to be substandard. If the reference cannot show you a problem somewhere, this reference is likely to be a plant and thus unreliable.
* Check on his financials. Ask for a financial statement (difficult to get.) Check the contractor out as if you were going to extend credit to him. Get several trade references and permission to check on his account balance at the bank. In effect you ARE granting him credit because you are allowing him to acquire debt on your behalf in order to buy materials and services. Remember, YOU have to pay if the contractor defaults.
* Go to a jobsite and talk to his men. Find out if they work for him full time or have been hired for that specific job. It should raise a flag if the contractor has no permanent employees. While subcontract labor is the rule in construction, at least the job superintendent should work for the contractor. If none of the employees work for the contractor, they have no idea what his business philosophy is and have no way of knowing what constitutes acceptable work.
* Find out how many jobs the contractor has underway at once. If he has many jobs underway, you might find that you will not get the attention you require. On the other hand, if you are to be his only work, that might be an indication of problems to come.
* Visit the contractor's facility and look at the amount of equipment he has to work with. While again it is common to rent most expensive equipment, if he does not own the basic items like saws and ladders, you might be seeing indication of financial problems.
* Discuss draw payments and holdbacks. Draw payments are progress payments made at agreed upon intervals during the rebuilding. Holdbacks are a percentage of the total that you retain until you are completely satisfied. Typically you will authorize draw payments based upon the completion of milestones. The holdback, typically 10-20%, is held by you or your insurance company until all "punchlist" items are completed.
* After the work is finished and while you still hold the holdbacks, make sure you get a notarized contractor's lien release. This release frees your property of any potential liens. It also states that the contractor has paid all suppliers and subcontractors and that he takes all responsibility for any that might pop up in the future. The worst thing that can happen to you is to pay the contractor and then have, say, the electrical subcontractor pop up with an un- paid bill for $4000 or so. YOU have to pay and then attempt to collect from the contractor. If you've happened to have already paid the contractor and he skips, guess what? You get to pay twice. The release is your only protection.
* Before the work starts make sure you get a signed contract in place. The contract should be as specific as you have time for. I believe it impossible to be over-specific. You should normally use the contractor's contract as a starting point. This is because the law interprets ambiguities against the writer of the contract. Even though you may mark up his contract until it is unrecognizable, it is still his contract.
* Insist on a detailed work scope broken down by room and including unit costs. The Unit Cost is the price per unit work. For example, the unit cost on carpet will be so many dollars per square yard to remove the old carpet and so many dollars per square yard to lay the new. Contractors are generally very reluctant to give out unit costs so you must plan on being persistent. Your insurance company generally requires these figures so you can get a copy from your adjuster if all else fails.
After you do all this homework, it comes down to whether the deal feels good or not. If you don't feel good about the contractor, do NOT do the deal. You'll end up spending more time with the contractor than you do your spouse so you'd better be comfortable. Plus when it comes time to resolve problems, a cordial relationship will replace months of legal hassles. This is especially true in the construction business since there is such a wide range of opinions as to what constitutes "good work".
For example: We had ceramic tile put down in our kitchen to replace the vinyl that existed before the fire. We paid the difference between what the insurance allowed for the vinyl and what the tile cost. The contractor had his men do the first installation. It was a mess. .... leading to cracking and they misapplied the grout. If we'd not had a good relationship with our contractor, we'd have had a nightmare. The job looked OK to the casual observer. One could, however, trace the path the refrigerator took by the cracked tile! We discussed the problem with the contractor and he volunteered to have his men tear it back out and then bring in a tile specialist to lay the replacement.
In the end I had to go with my instincts when I chose my contractor. He violated more than one of the evaluation criteria listed above but nonetheless I had a very good feeling and my feeling turned out to be correct. There is very little protection under the law so you have to make it work yourself.
If you want to do any remodeling during the reconstruction, you should negotiate these before you sign the contract. You should NOT put any of these provisions in your main contract. Why? Easy. The insurance company's only obligation is to put the property back to the condition it was in before the fire. You'll probably want to do a lot of remodeling because it is so inexpensive when done in the context of a fire reconstruction. You'll typically find that there is enough money in the insurance bid to do most of what you want. That is one reason you MUST have the unit costs.
Example: The first contractor bid over $600 per room for wallpaper. The actual installed cost was less than $150. The contractor obviously wants to keep the difference but you don't have to let him. I viewed it as there being $450 available for other improvements. I got it too!
You want to put the improvements in a separate agreement that only you and the contractor see. If the adjuster gets involved, he'll likely insist on the contractor rebiding the the job to reflect the actual cost. These negotiations are the most touchy part of the whole process and will take a lot of time and work. It is very much worth it. Again, you have to have a cooperative contractor to make it work.
If you care at all about the quality of work being done, plan on spending part of every day on the jobsite. Especially if the contractor is not also the job foreman. There were literally hundreds of daily course corrections that were necessary. Not to mention the workmanship issue. It took awhile to get things straight but by the time the job was half- over, I was able to direct the workers directly on workmanship issues instead of having to go back through the contractor.
Insist on a formal review meeting with the contractor on a weekly basis. Take the unit cost bid and check off the work items that have been satisfactorily completed. If the contractor has asked for draw payments, base them on this list. Items not satisfactorily done go on a punch list. Insist that the punch list be worked off in real time instead of being saved for the last. A lot of that last minute work never gets done. I consider these meetings and the resultant punchlist to be the most critical part of getting a good job.
Insurance revisited
Insurance. An ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table. Ambrose Bierce
You might remember back in the first article when I described the attitude held by most insurance companies toward small businessmen. That was nothing compared to what we've experienced AFTER the fire. Most companies just laughed at us. We finally found a company that would sell us about fifty thousand dollars worth of equipment coverage but the premium is almost $2000 for the year! That compares to just over a hundred before. We're working on a deal right now where some of our equipment can be covered under our homeowners and the rest will be covered under a smaller business policy. Our independent agent told us that it is just about impossible to find insurance for a year after any claim. He said that after a year things would settle down again but that we'd just have to tough it out for now.
The claims process with Central Mutual has been agonizing every step of the way. You might remember from the last article where I described how they tried to punish us for firing their contractor by delaying the start of our new contractor by over months. They are bad news. I also mentioned that things had smoothed out considerably since we'd hired a lawyer. It's amazing how things go when an attorney gets involved. Our adjuster displayed a massive amount of bravado, telling us that they were used to getting sued all the time but once the attorney started handling things, most problems magically went away.
I have to also give a lot of credit to Jim Garth, our contractor. Between him and the lawyer, we could play the "good guy, bad guy" game with the adjuster. Jim was very effective in presenting the "good guy" side of an issue. It was typical that we'd find a problem not previously addressed by the insurance quote, we'd bring it up to the adjuster, he'd refuse it, We'd have the lawyer fax over a demand letter and Jim would go talk to him. Jim would almost always get us exactly what we wanted. Yet another reason to have a contractor with which you have a good working relationship.
Documenting the damage and the repair work with photographs and daily notes has been invaluable. I've taken literally hundreds of photos and dictated hours of notes. When the adjuster's memory would fail regarding a particular item of damage, I could simply whip out the pictures and refresh his memory. It looks like everything is going to work out without court action but if going to court had been necessary, the pictures would have been powerful evidence. As it is, we've got one heck of a scrapbook!
Business & Emotional Considerations
It may seem funny to group business and emotion in the same topic line but for the small businessman and especially the Midnight Engineer, the two are inextricable. Typically one's whole life is bound up in the business. Before the fire I had spent almost every waking hour involved in the development of my product. Not to mention investing most every dollar I had. Seeing all that investment destroyed in a few minutes does funny things to one's self. Rapid Deployment Systems, Inc. as it existed before the fire is completely destroyed. The insurance settlement grossly inadequate to rebuild, Much of the intellectual property that constituted the product is gone. And last but not least, my will to proceed with the product was destroyed.
I have a second consciousness that is able to stand above the issue and impassionately observe the situation. I derive great insight from this ability. I am going to try to share some of what I've learned here.
The period immediately after the fire was hectic but emotionally unchallenging. We had a task - salvaging what remained of my office and house - and a deadline. The first contractor was pushing us to complete the salvage so he could go to work. We worked around the clock and had scarcely a single spare minute to contemplate things.
We turned the house over to the contractor on time and then ... Nothing. He did nothing. Meanwhile we had nothing to do either. My wife had her regular job, of course, but for me, there was little to do. There was some additional salvage and cleanup to be done to the items in storage in the mini-warehouse but without a place to work there was little choice.
I looked at renting some office space but it did not make sense since I expected the rebuild to only take a few weeks and since, having ... services that RDS offers is a subscription service that provides access to the international Usenet/Internet. Somewhat like a small CompuServe, for a monthly fee a user gets a login account on our computer, Dixie.com, and can use email and access the Usenet. The computer that hosted Dixie was destroyed so we had to build another. I decided to take my ex-partner up on an offer to locate it in his house. I had the phone lines moved and we commenced buying the parts to build the system.
As I acquired the parts and started building Dixie, I began to realize that my interest in computing in general was practically gone. Whereas before my greatest pleasures might involve making a program run or seeing hardware of my own design work, assembling and configuring Dixie was pure work with no pleasure involved. Similarly, as I collected the fragments of work that survived on my product, the Printer Nidget, it all seemed very alien to me. I had no interest in the product and it seemed almost like I had not even participated in its development. Getting Dixie back up allowed me to re-establish old friendships which was enjoyable but other aspects of computerdom left me cold.
Meanwhile nothing was happening on the house and we were living in a tiny 2 room apartment with 2 cats and a part-time dog. To say that my wife and I were bouncing off the walls is a gross understatement. For better or worse I at least had something to do in trying to get work started on the house and then after it became obvious that a firing was in order, firing the contractor and finding another.
Before the fire I'd developed ideas for a couple of products for the high performance automotive market that I'd planned on commercially developing after the Nidget became self-supporting. My first love is really motor racing and I'd planned on easing into that market as time and finances would allow. Now a couple of months after the fire and with no improvement in my attitude toward computers, I decided to pursue some of these ideas. One product is what I refer to as a cordless battery charger. Essentially a small gasoline powered DC generator with some custom controls to optimize its quickcharge performance, this product is aimed at the drag racer who has to charge his race car's battery after each run. My little 11 lb package produces more than 60 amps at 12 volts and will quick charge a battery in less than an hour.
The biggest problem was finding a place to work. My solution was to turn my open carport into a shop. I set up some sawhorses and plywood to make tables and use a number of the quartz-halogen stand lights I've previously described for illumination. I have a BMW that I seldom drive so its locking trunk became the world's most expensive tool chest. Inside 2 weeks I had a wooden prototype constructed that actually worked and which permitted me to begin testing and optimization.
Meanwhile the house sat vacant. These were very trying times. To say that my wife and I were at each others' throats is a gross understatement. That we survived this period with our marriage healthy is a tribute to what we've built over the last 17 years.
Now we leap forward to the present. We've been in the house now for about 3 weeks. My attitude toward computers has improved to the point to where I actually did some programming the other night. The Nidget is still essentially dead. The cordless battery charger is ready for final production engineering. I know I'll need a bit of outside employment while I finish developing and marketing the battery charger. I'm not sure what this work will be but I'm sure it will not involve computers. Hey, anybody who might need a hacker/writer/welder/heavy equipment operator/ace mechanic/racer should feel free to call!
I've learned a few lessons from this experience that I'd like to share with you:
* Disasters such as my fire have large and unpredictable effects on the phyche. If you are unprepared for these, as I was, the impact can be severe.
* Disasters tend to magnify other events in your life. If you have problems with friendships or your marriage, a major disaster will magnify those problems. You'll have to be prepared to work overtime to mitigate the consequences.
* Do not be surprised when major changes in your attitude toward your work and your personal relationships occur. This is almost inevitable and can be used to the good if properly managed. It can also cause major disruptions if not properly anticipated and managed.
* Realize that during the recovery stage you are emotionally vulnerable. It is therefore a good idea to postpone as many decisions as possible until the recovery is over. I realized early on that my decision- making processes would likely be flawed and so I did little in the way of long term planning. For me, moving back into my house was like flipping an emotional toggle switch. The move signified that the disaster was over.
* After the disaster is over, don't be surprised if you begin to look on the event with a somewhat positive attitude.
I've found this positive attitude developing over the last few weeks. While the fire was a total disaster financially, it has had some beneficial effects. It got me out of a partnership that would have inevitably led to problems. It forced me to discard property that had little real value but which was taking valuable space in my office. It made me evaluate my career. It made me evaluate friendships. Finally, it made me re-evaluate my attitude on life. I suppose for the first time in my life I have had to address my mortality. Escaping by a thread from that burning building pointed out to me for the first time just how short life can be. My attitude had been that there would always plenty of time to do all the things I want to do. That's just not so. I'm now evaluating what the important things in my life are and I'm dropping those that are not.
Bill Gates and I have discussed this topic on a number of occasions and it is probably his insistence that I write about it that has persuaded me to do so. If there is one lesson for the budding Midnight Engineer to be had out of all of this mess it is this:
If you have an idea to pursue, then by God DO IT! There will never be a better time than the present. You'll never be any younger and you'll probably never have more resources at your disposal. Even if you fail, you'll be a better person for it. Most successful people have at least one failure to their names.
I remember how frightening it was the day I decided to go against the advice of my family and wife and pull the plug on my 9-to-5 job to go consulting. We had your typical young working couple's savings - practically none. We loaded our meager household up on a U-haul truck and away we went. What followed was immense reward, both financially and intellectually. I'm going to close the series with this thought by Herbert B. Swope, an American journalist who died before the age of the computer curse:
"I cannot give you the formula for success, but I can give you the formula for failure - which is: Try to please everybody."
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Disaster By Fire: Part 3 of 4
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