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IF YOU'VE SURVIVED in the kitchen and bath design and remodeling business for a long time, it's likely that most of your projects have been happy, successful ones for both you and your clients. Typically the project begins with enthusiasm on all sides and usually fn- ishes, after some ups and downs along the way, with a happy, satisfed customer and a proft for your company. Every once in a while, however, something will occur that causes the relationship be- tween you and your customer to go sideways. When this happens, you need to be prepared to deal with the situation so that it doesn't devolve into one that will threaten the very existence of your business. This month, we'll look at ways to avoid dis- putes, difuse them when they arise and manage them when they escalate. AVOIDING DISPUTES The best way to avoid disputes is to make sure there is a complete and clear understanding of exactly what the project involves and what the responsibilities are for all parties. This process begins with your frst meeting with a new client. At this point your client is likely describing their dream project, which probably includes everything they have ever seen in all of the design magazines and on "Lifestyles of the Rich and Famous." And that's okay. It's best to get everything out on the table to start and then trim things back to reality. Sometimes a client's budget can accommodate many of these things and it's important that they be considered during the design process. As the design and planning process proceeds, it is imperative that the client understands exactly what is being included and what is not. The plans and specifcations your frm prepares should be clear, complete and understandable for the client. Be careful when specifying that when product codes are used, a description of the actual product is also included. It is especially helpful to include "catalog cuts" within your actual specifcations so that you are not faced with the statement: "How was I supposed to know what that product number stood for?" There are several steps that can be taken to head of this situation, including statements from your designers to their clients that the specifcations and plans are the controlling documents. The plans and specifcations should be reviewed line by line and page by page at the time the contract is signed, with the client initialing (and dating) each page as this review takes place. If the designer is aware of items that were part of the original "dream" that have been removed for budget considerations, this is a good time to point out that such items are no longer part of the project. Finally, when it's time to sign the overall contract, it is a good idea to have a statement such as the following, right on the summary page, directly above the client's signature: "This is a complete and exclusive fnal agreement of the parities hereto, with respect to the work and products indicated, and supersedes any prior contemporaneous oral, written or implied agreements with respect thereto." While such a statement would seem to be pretty clear, if the client does not really focus on the meaning of it, you will still wind up with a misunderstanding and a potentially unhappy client. The fact that it sounds "legalese" may help the client realize that it carries legal implications. DIFFUSING CONFLICTS AND DISPUTES It is the rare project where there is not some sort of problem or misunderstanding. When these things do occur, there are always two ways they can go: They can be resolved quickly and amicably or they can turn into a full-blown dispute. The rule to keep in mind is that, if a problem grows into a full-blown dispute, your frm will be the loser! What this means is that it's essential to address conficts at the very frst sign of trouble. When you get that voice mail complaining about the actions of one of your employees, the fnish on the cabinets or the failure to clean up a job site, do not kid yourself that it will just go away. The correct response is to contact the client immediately, apologize for the misunderstand- ing and assure them of your concern. All too often, we are inclined to take a posi- tion that the client is being unreasonable and we feel that we have to stand on "principle" when the cost of giving in is not really that signifcant. There will be times when you feel that a client is trying to get something for nothing, but you'd better make sure that the cost of fghting about it is worth it. There will be times when you feel that you are being taken advantage of, but that is something you just have to live with. WHEN ALL ELSE FAILS There are times when the issues that arise are too signifcant to just cave in. When that hap- pens, it's imperative that you have your docu- mentation in order and that your actions do not jeopardize your position. First, make sure that your contract is prop- erly written. While we will not get into all of the aspects of a good contract, there are a few areas worth noting. Since it is impossible to address every subjective issue in a contract, you will often have to rely on industry standards. It is important to have an authoritative reference for these, such as the Residential Construction Performance Guidelines, which was developed by the National Association of Homebuilders (NAHB). It's also important to defne how disputes are to be resolved. Mandatory media- tion and arbitration is a much better choice for resolving major disputes than allowing a client to haul you into court. It is equally important to be very careful of what you say if the situation seems to be headed toward a major dispute. If you actually get into an arbitration, your position may not be as sound as you believe. Chances are you wrote the contract your client signed, and you, after all, are the professional remodeler. Do not expect to be given the beneft of the doubt in a legal battle with a consumer. Even a simple mediation will cost you well over $1,000, and an arbitration can easily get to $10,000 (if you win). You might want to consider very seriously whether to dig in your heels when a dispute with a client arises. The bottom line is to remember that manag- ing disputes and resolving them must be based on business decisions, not emotional ones. It is almost always a better business decision to resolve disputes directly with your client than to bring in the lawyers. BRUCE KELLERAN, CKD, CPA " The best way to avoid client disputes is to make sure there is a complete and clear understanding of exactly what the project involves and what the responsibilities are for all parties." Read past columns and features and send us your comments about this article and others at KitchenBathDesign.com Avoiding Conficts and the Road to Ruin 20 Kitchen & Bath Design News • February 2016 BUSINESS MANAGEMENT