Hiring a Contractor

Hiring a contractor can be daunting. You are hiring someone to do work that you don’t know how to do, and consequently there is a large degree of trust that you have to place in the people you hire.

Define the Project
Before talking to a contractor, you will need to define the project, decide on desired materials, and expectations for completing.  The more specific you are, the more accurate the estimate will be.  However, with most construction you will be working with unknown factors, that until some component is demolished, the full extent of the project and consequently cost and time, may not be known (See the later section Change Orders). 

How to find contractors
The best method is to ask friends, family, and co-workers for references from contractors who have done similar work.  Google searches, as well as Angie’s List and the Better Business Bureau can be useful, but many of these resources charge contractors to be on their website and ratings can be skewed to make them look better.

Choose the right contractor for the right project
Select the contractor that specializes in the type of project you have.  A general contractor who builds home additions isn’t necessarily the right person to remodel your kitchen.  You don’t want to be the customer they gain experience with.  Make sure they work to the level of quality you need. A lot of contractors get materials from the big box stores which is perfectly fine. However, if you are wanting professional grade, high end commercial components, you would be better served to work with a contractor familiar with this quality of products.

Interview at least three contractors
Ask a lot of questions and get written and itemized bids.  When comparing, make sure each bid includes the same materials and work to be completed.  Don’t be afraid to ask for clarification if something is unclear.  You may learn something from one contractor about a better alternative. Don’t be afraid to ask the other contractors to adjust their estimates based on what you learned.

Questions to ask when interviewing
1. Does your project align to the size, scope, and experience they have?

2. How long have they have been in business and how many projects they have completed that are similar in scope to yours?

3. Will they provide financial references from their bank or suppliers?

4. Will they provide a list of client references (caution, they will likely only provide references from satisfied clients)?

5. How large is their company, and how many projects do they work at one time?  A contractor who works by himself may give you more attention, but could take longer to do all the work.  A contractor with many employees may have more specialized people working on various components of your project, but may not give you as much personal attention.

6. If they use subcontractors, ask:
  • What is the relationship they have? Is it professional or are they friends/family?

  • How long they have worked together?

  • What work is performed by the contractor and what is done by subcontractors?

It is perfectly acceptable to use subcontractors but there is more risk in delays because there is another person to schedule.  Also, you want to be sure that the subcontractor used has had a longstanding relationship with the contractor so their quality of work is known.

7. How will their bid be structured?  It’s easy to give a single all encompassing price, but a good contractor will take the time to break down each component of the work and notate it in their bid.  This is important because during construction the scope of the job may change based on design changes or findings that are uncovered through demolition that were not planned for.

8. How do they bill for the project?  A project should be paid for upon satisfactory completion. However, based on size, the contractor may require progress payments during construction to offset their material purchases. Progress payments are perfectly acceptable but be sure there is a contingency due at the end of the project to leverage completion of work.  If you pay everything in advance a contractor can disappear before the project is complete.

9. Who is paying for materials?  Especially with kitchen and bathroom remodels, a lot of time can be spent purchasing tile, cabinets, and fixtures.  A contractor will bill you for their time at the hardware store purchasing materials. A home owner can often save money by buying these items and having them on hand when the contractor needs them. 

10. When they can start?  Does it align with your timing?  Note, be prepared that the good contractors are the busy ones and may not be able to start immediately.

11. Who is responsible for obtaining permits for the project?

Verify experience
1. I believe that the only sure method for researching a contractor is through the Department of Labor and Industry.  The following is a link to the website: http://www.lni.wa.gov/TradesLicensing/Contractors/HireCon/  From here you can make sure a contractor is registered, actively licensed, with a bond and insurance, and verify that an electrician, plumber, is certified (licensed) in Washington.

2. Ask the contractor for a copy of his license and copies of the licenses of the major subcontractors who will work on the job.

3. Check references by talking to clients and subcontractors. 
  • Ask to talk to current clients. They have the most recent experience with how the contractor is performing now. 
  • Ask subcontractors, if payment is on time and if they often have scheduling challenges.

4. Read online reviews. Don’t trust anonymous reviews and make sure that the reviewer had actually hired the contractor.

5. While it is not always possible, ask to visit a job site they are currently working on.  Do they protect the home from dust? Are floors in areas they are walking through covered? Is the work area tidy?

This is an area often forgotten about but is crucial to the process.  Changes are inevitable, either by you wanting to alter the design or because of a newly discovered finding during construction.  Hiring a contractor that can both communicate construction terms and can listen to your needs is highly important when changes occur.  Additionally, the contractor may be spending a lot of time in your home, possibly while you're not home, and should be someone you can trust.  A word of caution: don’t let their charm fool you, always verify what is said and document it in writing or e-mail.

The Bid
For most homeowners this is the most important factor in deciding on a contractor.  Make sure the bid:
1. Is itemized and details each component to be completed.

2. Don’t always take the lowest bid.  Price is important but the lowest bid may have been artificially adjusted in order to gain the job.  You don’t want a contractor who cuts corners, uses inferior materials, or has intent to recoup costs through change orders and “newly discovered” findings.

3. To compare bids, ask each proposed contractor to break down the cost of materials, labor, profit margins and other expenses the same way.  Don’t get discouraged if they don’t. Often contractors use estimating software that limits how they can itemize bids.

Don’t be afraid to haggle
If you like a contractor but they are a little high, negotiate before you sign the contract.

Payment Schedule
Payment schedules can speak to a contractor's financial status and work ethic. If they want half the bid up front, they may have financial problems and need your money to finish another project.

For large projects, an initial deposit may be requested to pay for expensive upfront material purchases.  A contract should have a progress payment schedule triggered off completion milestones.  NEVER make a final payment until the project is complete and all punch list items are complete.  You need to retain financial leverage to ensure everything gets completed.

Negotiate ground rules
Discuss what hours the contractor can work at your home, what kind of notice you’ll get, what bathroom the workers will use and what will be cleaned up at the end of every work day.

Verify your insurance coverage
Know what is covered by your homeowners insurance and what is covered by your contractor’s business insurance. Get a copy of the company’s insurance policy.

The Contract
Draw up a contract that details every step of the project: payment schedule, proof of liability insurance and worker's compensation payments, start date, milestone dates, 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. A contract is designed to protect both you and the contractor, if it is not in writing it is just your word against theirs.

Don’t sign a contract for your entire renovation budget
No matter how careful you and the contractor are in preparing for the job, there will be surprises that will add to the cost. Prepare for a contingency between 10 to 20 percent more than the contract bid.

Change Orders
Many factors can contribute to the need for a change order. Most commonly would be when the client changes the design and/or materials, or wants to add on additional work.  Secondly would be, once construction starts, floor, walls, and ceilings are opened up exposing previously unknown conditions that require additional repair or modification.  This work was not in the original bid so a contract addendum or Change Order is needed.  Never accept a verbal agreement and always be sure to have the agreed upon work documented in a signed change order before work commences.

Once work has begun
The following are a few additional best practices to follow once work has begun
  • Check on the job and talk to the contractor frequently.

  • Something that is done wrong will be harder and more costly to fix later.  

  • Make sure that, as the job progresses, it meeting your expectations. 

  • If you see a potential issue, speak up immediately.

After the job is complete
Get lien releases and receipts for products
If your contractor doesn’t pay his subcontractors or suppliers, they can put a mechanic’s lien against your house. You want copies of receipts for all the materials, plus lien releases from all the subcontractors, and the general contractor before you pay. You can ask for some of these when it’s time for progress payments.

Do not make the final payment until the job is 100% complete
Contractors are notorious for finishing most of the job and then moving on before they get to the final details. Do not make the final payment until you are completely satisfied with the work and have all the lien releases and receipts.

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