I write this article with some real specific experience on dealing with contractors and their subs. I have, in the past 30 years, had built 3 homes and renovated probably 10. With each of these projects I learned more and more lessons and with each asked my friends and family just to take a gun and shoot me if I ever even spoke of doing either again. My last experience in having a home built ended in a major cost overrun which taught me the legal lesson of the difference between the words “will” and “should”. You see my iron clad contract which made all of the provisions I requested and guaranteed the finished price stated that the final price “SHOULD NOT EXCEED X $$”. $40,000 later I discovered it should have said, “WILL NOT EXCEED X $$”. The word “will” affirming the agreement while the word “should” infers some sense of a possibility of the price changing and changing it did ending in a final demand by the contractor for the aforementioned $40,000 before I could move into the home.
While most home contractors out there are legitimate and do great work, the list of nightmare contractors is long and represents thousands of lost dollars and a myriad of disappointments. To avoid hiring the contractor from hell I offer the following advice:
1. Make plans
Before you begin your process of locating, interviewing, investigating and hiring a contractor you should have a completed set of plans for your project including detailed drawings and specifications. Without these plans in place you are asking a tradesman to bid on a nebulous non specific job and you are asking for trouble. A conscientious contractor will want not only a complete set of blueprints but also a sense of what homeowners want out of a project and what they plan to spend. Once these plans are in place, stick to them. Making changes to plans after work begins could lead to cost overruns and delays.
2. Get recommendations
Start with your friends, family and neighbors. Check with the national associations of the trade that you wish to hire for a list of members in your area, Angie’s List, which is an on going internet site which lists real personal recommendations and warnings in your specific area, and maybe check an individual business with the Better Business Bureau. I hesitate to mention the BBB because this is an organization of paid members which in some cases may also skew their results.
In smaller areas you may also talk with a building inspector, who should know which contractors routinely meet code requirements and may be able to give you advice regarding code requirements. Visit your local building supply or hardware store, they know the local contractors and which ones have the best reputations. Although most of the big box stores do have professionals that either they recommend or that they can sell you the services of, remember they are being recommended because of an existing relationship with the store. The store is likely making a profit on your transaction and thus their opinion may be skewed. In some cases you may have recourse back to the store but make sure that is the case and be aware that this arrangement may cause your cost to be higher. I have heard many horror stories about the contractor who was hired through the retailer only to disappoint the customer and satisfaction only coming after considerable effort if at all.
3. Call your prospective Contractors
Now that you have a list of possible contractors, consider that you are an employer interviewing a prospective employee. Make calls to each of your prospects and ask them the questions that you feel are important to you which should include the following:
•Do they take on projects of your size?
•Are they willing to provide references from suppliers or banks?
•Will they give you a list of previous clients? Remember, though, they are not going to give you names of dissatisfied customers so you are going to have to do some of your own research on their work.
•How many other projects do they typically have going at the same time?
•Do they maintain their own tradesmen or do they have to depend on subcontractors? If they have to use subs you may be put in a position of having to research their reputations as well. Sub contractors can be the weakest link in the chain of getting your project done and are the easiest excuse your contractor can use for a lack of progress or delays on your job. It is important, therefore, that the contractor have a good relationship with his subs and is good with his scheduling of those subs.
These answers should give you an idea of the company's availability, reliability, how much attention they'll be able to give your project and how smoothly the work will go.
4. Invite them over to see your job
Once you have made these phone calls, pick three or four contractors to show them your proposed project, to obtain an estimate and for further discussion and questions. A contractor should be able to answer your questions satisfactorily and in a manner that puts you at ease. It’s important that you feel comfortable with the contractor you choose, that you communicate well and that you have a sense of trust. Remember this person and their crews will be in your home for hours at a time.
5. Build trust by verifying the facts
Call up former clients to find how their project went and ask if you can see the finished job. Ask if they know of other customers of this contractor so that you can find additional references that didn’t come from the contractor himself. You should ask to see a current job site and see for yourself how the contractor works. Is the job site neat and safe? Are workers courteous and careful with the homeowner's property and is this homeowner happy, so far, with his results?
6. Demand proof of proper licensing and insurance.
Make sure the contractor is licensed to do business in your state and that he has proper general liability and workers-compensation insurance. Learn the requirements in your state and verify that contractor is licensed.
7. Get bids
To compare bids, ask everyone to break down the cost of materials, labor, profit margins and other expenses. Generally materials account for 40 percent of the total cost; the rest covers overhead and the typical profit margin, which is 15 to 20 percent. Don't let price be your guide. I believe, that as hard as it is to do, you should disregard the lowest bid especially if it is significantly lower than the others. A bid like this can usually point to a desperate contractor or a major mistake in his calculations. Even though you may have the law on your side to enforce this contract you still will be burdened with the legal costs and efforts to win and you may end up with a project left unfinished or poorly completed. These situations may be more frequent as a sign of our current unhealthy economy. Beyond technical competence, comfort should play an equal or greater role in your decision. The single most important factor in choosing a contractor is how well you and he communicate. All things being equal, it's better to spend more and get someone you're with whom you are comfortable.
8. Discuss and agree upon a payment schedule
Payment schedules can also speak to a contractor's financial status and work ethic. If they want half the bid up front, they may have financial problems or be worried that you won't pay the rest after you've seen the work. For large projects, a schedule usually starts with 10 percent at contract signing, three payments of 25 percent evenly spaced over the duration of the project and a check for the final 15 percent when you feel every item on the punch list has been completed. In no circumstances should you exceed an initial payment of 30% as a down payment and even then only upon the delivery and acceptance, by you, of the all of materials.
9. Put it in writing/Obtain a contract
Draw up a contract that details every step of the project: the payment schedule as above; proof of liability insurance and worker's compensation, if a contractor does not have proper workers compensation insurance your home owners insurance or you personally may be held as liable; a start date and projected completion date; specific materials and products to be used; and a requirement that the contractor obtain lien releases (which protect you if he doesn't pay his bills) from all subcontractors and suppliers. Insisting on a clear contract isn't mistrust, it's about insuring a successful project.
10. Pay by check or if possible by credit card.
The use of a credit card gives you the leverage to charge back any disputed charges. If paying by check write it out to the contracting company rather than to an individual. Make final payments only when the work is completed to your satisfaction. A reputable contractor will not threaten you or pressure you to sign documents if the job is not finished properly.
Will these steps prevent problems? Yes. Is there still a chance that something will fall between the cracks and you will become the victim of a bad contractor? Yes. So practice vigilance. Be aware of what’s going on with your job and insist that problems be corrected as they happen. Don’t fall into a false sense of security and think that it will all be OK. Remember the first principle of “Murphy’s Law”….If any thing can go wrong, it will!!!
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