The How-Tos of Hiring a Contractor
Are you faced with a home improvement project for which you need to hire a contractor? If so, here are 5 tips to help you choose the right contractor and ensure your project goes smoothly.
1. Do your due diligence on potential contractors. How do you find one? Start with word of mouth. Ask friends and relatives about contractors they used and were happy with. There is no better (or worse) advertising than a satisfied (or unsatisfied) customer. Also note who advertises in papers (like this one) and on TV, radio and internet. A company that advertise is likely successful at what it does. Finally, many websites and businesses rate and even prescreen contractors (e.g., Angie’s List, Hire it Done and the BBB). Ask contractors for references, licenses (some must be licensed – builders electricians, roofers) and insurance. Check for complaints filed with the State of Michigan (Dept. of Licensing and Regulatory Affairs, Attorney General) and how they were resolved. This should help weed out fly-by-night contractors.
2. Shop around. After narrowing the list of contractors (3 is perfect), obtain quotes from all of them. Quotes should identify scope of work, materials to be used and overall cost. With regard to cost, the lowest bid is not necessarily the best. A low bid may reflect differences material quality, workmanship and warranties or even that the contractor does not appreciate the scope of the project. Scrutinize bids as carefully as you do contractors.
3. Once you settle on a contractor put your contract in writing. This is key, as the contract governs your relationship with your contractor. The contract should at a minimum spell out (i) exactly what the contractor will provide, including scope of work, materials, permits, etc. and the price, (ii) how changes in the scope of work will be handled, usually through written change orders with price adjustments, (iii) start and completion dates, (iv) payment schedules and (v) warranties. It is helpful to have an attorney draft or review the contract to ensure it protects you.
4. Monitor the project from beginning to end. Be sure to obtain all required permits and to post them at the site along with contact information for you and the contractor. Inspect the project daily (or more often) to ensure work is being performed as expected. If it is not, speak up immediately to get the project back on track and minimize any costs to correct work.
At this point, change orders deserve special mention. Construction jobs are fluid by nature and invariably changes need to be made during a job. Things like weather, material shortages and unforeseen/immovable objects may require modifications to your plans. Document all changes in a written change order noting any increase or decrease in cost for the change.
5. Manage the money. Small jobs may require one payment at completion. Large projects typically require progress payments as milestones are met. In either case, when your contractor seeks payment they should provide you with a contractor’s sworn statement (attesting to subcontractors and materials used, payments received/made, percentage of work complete) and waivers of lien from the contractor, subcontractors and materialmen for work to date. The waivers are important, as contractors providing services or materials can put a lien on your home to ensure they are paid and can foreclose on that lien (i.e., sell your home) if they are not.
A final rule about payment – do not pay your contractor in full until the project is complete. Near the job’s end you should do a walk-through with the contractor and create a “punch-list” of items to be finished. Your contract should allow you to hold-back 10-15% of the total project cost to be paid upon completion of these items. The hold-back gives you leverage to ensure the contractor sees the job through to completion.
Now that you know how to do it, get to it!