Before Hiring A Contractor

Most homeowners, at some point, will require the services of a contractor. The need could be small or it may involve a substantial renovation. I, unfortunately, over the years have had to both witness and hear about some horror stories when it comes to contractors.

It is a fact that contractor fraud in the home improvement business is consistently one of the most inquired and complained about industries with the Better Business Bureau. The victims are not only the “gullible old ladies”, because many folks are trusting in nature, everyone can be a potential candidate to be taken advantage of.

Once a decision has been made that the services of a contractor are required, it’s a decision that should not be rushed into. For smaller projects, the contractor may be able to undertake the entire work requirements on his/her own. For larger projects, the contractor will typically take charge of the whole project. Often times, projects of this magnitude may require the services of architects, designers and various sub trades people. The contractor may oversee the entire project, which would include but not be limited to obtaining all necessary permits, hiring the sub contractors and the supervision of the work.

Finding a Contractor

This is obviously a crucial element of the project. For starters, ask your family members, friends or neighbours to see if they can recommend a contractor. Other sources include: local homebuilder and renovation associations; your neighbourhood building stores, and contractors listed on the internet.

Questions to Ask

It is important to find out as much as you can about the contractor. The contractor should have no reservation about answering your questions. These questions should include:

If a contractor can’t confidently answer these questions and doesn’t seem to have sufficient knowledge about the technical details of the job, this should send off warning/alarm signals that this may not be the contractor for you.

An important intangible but often underestimated aspect of this decision making process is the ability to get along with the contractor. I have had numerous experiences with contractors and invariably plans change, problems arise, etc and the working relationship you have with the contractor is of utmost importance. If the communication channels are strained with the contractor it can become very tense. You also need to have unwavering trust in the contractor that they have your best interest at heart. They will be responsible for many financial decisions and the element of trust must be present.

Ultimately, the contractors you interview should be able to provide numerous references from past clients who have had similar work performed. I would call these references and ask specific questions about their experiences with the contractor and their trades people. Ask them amongst other questions if there were any problems, was the work completed on time, would they hire the contractor again. If you can visit completed projects, this would be strongly recommended. Remember, typically (one would assume) referrals supplied by contractors should be satisfied clients. I can’t imagine a contractor providing names and numbers of clients they have had disputes with. The random sampling of calls you make hopefully are an accurate representation of how the majority of the contractor’s clients felt about the services rendered. It would also be advisable to check with the Better Business Bureau to see if any complaints were filed against the contractor.

Getting Estimates or Quotes

As a rule of thumb, it would be prudent to get at least three independent quotes for any project. You can then compare all three quotes. For projects more substantial in nature, you will require detailed drawings and specifications. This would typically mean acquiring the services of an architect or designer. Even for a smaller project, written specifications are needed. Be as concise as you can be with respect to the type of finishes you want, the type of flooring, the brand of doors, windows, etc.

Keep in mind for larger projects it may take the contractor up to three weeks to prepare a detailed, written estimate. Quotes can either be fixed quotes or cost plus method. A fixed quote includes all the materials, labour, equipment and fees, plus contingencies, overhead and profit. Allowances may be established for items yet to be selected. This allowance would serve as an estimate only and would be later adjusted when a decision has been made. In a cost plus contract, the contractor is paid for labour, materials, equipment plus a percentage for overhead and profit. This arrangement is quite open ended, consequently the end figure could vary significantly. Always leave a contingency for unforeseen costs.

Don’t always go with the lowest price. It may be unrealistically low. This low price may be because the contractor either misunderstood the project, or the contractor may be simply trying to gain a competitive edge over his/her competitors by quoting artificially low. Either way, you can anticipate additional costs or you may end up with an unsatisfactory job.

It is important to get all agreements in writing. Don’t do cash deals as there are many risks and pitfalls that may negate the perceived savings. For example, without a written agreement cash advances may be unprotected. I have sadly heard numerous stories over the years where the client advanced sizeable amounts of cash to the contractor and the contractor never returned to the site. Also, a cash deal will give you no legal recourse if the contractor does an unsatisfactory job or if they walk off the job before finishing it.

Once the job is completed, the contractor will often ask you to sign a certificate of completion. Before you sign this document, make sure the work has been thoroughly inspected. If there is still outstanding work be sure to note it and do an appropriate holdback.

Holdbacks

A builder lien holdback is used for the sole purpose to ensure sub contractors and suppliers have been paid so that they don’t subsequently place liens on the property to secure payment. If there are no sub contractors or suppliers, this holdback will not apply. Please note, the builder’s lien holdback cannot be used to correct deficiencies.

A deficiency holdback lien is used when the project is substantially finished but there is still some incomplete work. It is standard to holdback a reasonable amount to cover the costs of this pending work.

A seasonal or delivery holdback is defined as a holdback that could not be completed because of the time of the year or because products weren’t readily available. In these instances, it is commonplace to do a holdback equaling the cost of the remaining uncompleted work.

Lastly, it is important that the contractor has worker’s compensation and third party liability insurance for all the people on the job. Don’t just take your contractor’s word, ask to see the certificate. Two million dollars is standard coverage.

There are many hardworking, honest and reputable contractors that do high quality work and use good materials and provide solid value at reasonable pricing. This article will hopefully ensure that those are the folks you ultimately end up dealing with.