Out of the Woods: How to Choose Your Contractor

Date May 22, 2008 at 10:00 PM

Publication SantaFe.com

Categories Real Estate

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Probably the most important decision you will make when building a new home or remodeling your current home is choosing your contractor. Your choice of contractor determines whether your building project goes smoothly, finishes on time and within budget, or potentially becomes a nightmare.

Most consumers are not aware of how complex building can be. A good contractor orchestrates your project by thoroughly understanding the plans and specifications, provides an accurate estimate, contracts with subcontractors, schedules the work, and provides you every month with a written record of all payables and receivables.

I have worked in the construction trade and managed my own company for thirty-five years. I'm always amazed how intelligent people sometimes hand over large sums of money to a "contractor"€ without doing their due diligence. Consumers often have a vision of a friendly guy in overalls with a pickup truck, a tool box, and a ladder. That might have been realistic half a century ago. Today, a good contractor has a comprehensive understanding of construction, building codes and zoning ordinances; a relationship with honest and reliable subcontractors and suppliers; an ability to work with the city or county and its staff; and knowledge of how to run a business from accounting to employees to bidding a job.

Below are a few suggestions to help you chose the right contractor to build your home:

Scope of Work

Providing the contractor with a clear description of your project is essential. The best way to do this is with plans and specifications prepared by an architect or designer whether it is a small remodel or a large new home. It is well worth the expense of this step because it assures that everyone is on the same page and avoids assumptions. If more than one contractor is involved in pricing, it assures that you will receive comparable bids. Make sure when asking a contractor for square footage costs that you specify what is included in their square footage number. DO NOT accept an unwritten bid after a verbal description of the work. This is a recipe for disaster.

References

Ask the contractor for a list of references from former clients whose building projects are similar to yours. If you are planning on building a 5,000 square foot home, you need a contractor that routinely builds large residences not someone that specializes in kitchens and bathrooms or installing solar collectors. Call each reference and ask specific questions about the quality of the experience, supervision, scheduling, billing, subcontractors and warranty follow up. Then check with the local construction authorities and the Better Business Bureau to make sure that there have not been complaints lodged against this contractor.

Business Practices

When interviewing contractors ask to see the contract you will be expected to sign and the subcontractor contracts.

Ask the contractor if they and their subcontractors are licensed and insured. This is important because if these guys do not have liability insurance and someone gets hurt on the job, guess who gets sued?

Does the contractor provide lien releases with the monthly billings from all the subs and suppliers on the job? The reason for this is if you pay the contractor and he has not paid their subs or suppliers, they can put a lien on your house.

Does he provide monthly bills based on a schedule of values of work done to date?

How do they supervise the project and who is your contact in their company?

Pricing the Project

Once you have narrowed your search and are ready to have a contractor price your project, ask the contractor for a lump sum based on the plans and specifications and the contractor's fee. Ask what is not included in the price. If the cost is more than you wanted to spend, ask for alternatives and suggestions on lowering the price. Many contractors at this point will offer to do the project on a time and materials basis. I would counsel against this approach because the owner assumes all the risk if the project goes over budget.

Time and Scheduling

A committed time schedule for the project that is written in the contract is essential. Recently the New York Times had an article on home building which stated, "Your most expensive component in life and contracting is time. If you really want to save yourself money, then save yourself time."€

We all hear stories of large remodeling projects where the owner-in an effort to save money-chooses a very inexpensive and inexperienced contractor. After your remodel has taken a number of years and you've gone through several contractors, you'll agree that you would have saved money if you'd done your homework in advance. The right contractor for your home will more than earn their fee by building a quality home at good value on time, on budget and make the experience enjoyable.

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