Project work is completed. You have a set of plans and a building permit in your hand. The only thing that stands between you and the long-awaited remodeling of your home is the need to find a qualified contractor. Someone you can trust in one of the biggest purchases you could ever make after an initial home purchase. In this article I will tell you what I consider to be the best method to ensure success when you hire a contractor for your remodeling project.
In California, in the state in which my remodeling company is located, the State Licensing Board of Contractors (CSLB) of the Consumer Affairs Department is an agency that licenses and regulates contractors. Their website is an excellent link to best practices and status of contractors. You can find a contractor by name or license number on the CSLB website. It will show whether they have a bond and employee compensation for their employees. They are needed. If there is a diplomatic action, it will also be documented. If your project will take place outside of the California Audit with your local state government to find out if there is an equivalent agency. At the very least, contact the Better Business Bureau in your area to find out if there are any complaints about the contractor you would like to hire.
There are other important qualities. How long has your contractor been in business? How long will they stay in business? It is in your interest for your contractor to remain solvent during your project and for many years to come. Many contractors failed in the middle of the project, leaving the owner of the dismantled house and the challenge of finding a new contractor to take responsibility. If something fails after the completion of the work, you want your contractor to be available to fix it. If an accident or failure occurs during or after a project, it is important that your contractor has liability insurance to cover it. Liability insurance is voluntary and is carried out by qualified contractors.
As for the common wisdom of “Get at least three bids”, I only approve of this when you need discreet home repairs, such as a new roof, paint work, or some doors and windows. In this case, the scope of work is clear, and for various specialized contractors it is relatively easy to submit bids for apples and apples. If your project includes a number of deals and a higher level of complexity, you may be interested in a different approach than searching for a number of “free grades”. In the renovated residential market, there is no standard for approaching this situation, and the expectations of owners, architects and contractors vary widely. Please let me explain my approach.
An example worth considering is a public project, a competitive rate scenario. This is a formal process. Plans and specifications are complete. Rates must be formatted in a standard format. This allows you to compare apples with apples between bets. The ability to bid is available to all qualified bidders. This guarantees quality for the client and level of the playing field for contractors. The bid is required to be awarded and that it should be awarded to the lowest price. When a bid is awarded, the information is required to be made public. However, these requirements are absent in the market of reconstructed residential buildings and less formal trading scenarios are usually used. Combined with the frequent problems of incomplete plans and specifications, this can lead to the fact that competitive contractors will submit bids, which vary widely within wide limits. This will make an accurate comparison of their rates difficult, sometimes impossible.
Obviously, the creation of bids requires a lot of time and cost. If there is no direct compensation for these costs, it becomes overhead. Overhead costs are reimbursed through the contractor’s invoices to their customers, which are based on their rates. The higher their overhead costs, the higher their rates. The more expenses they absorb by offering “free estimates,” the higher their rates should be for recovery. The result is that the actual clients of the contractor subsidize all of these tenders, including tenders to potential contractor clients who never hire them. The alternative I prefer is to ask each client to pay at least part of the cost of their cost planning. This approach allows my company to remain competitive, offering the highest level of products and services. I urge owners to interview a number of contractors, check their references, and then hire the most qualified ones.
It is in your interest to keep your contractor as early as possible. They can help you and your architect with technical and pricing information that informs you about your decisions in aesthetics, budgeting and planning. Further discussion of this approach can be found in Jim Locke's “The Well Built House” and in our Trade Secrets blog, see the Link below. I understand that in this approach there is no “advantage” of directly comparing the price of a project between contractors. I think this is the best advantage for working with someone you trust, who you trust, who are in your team from start to finish, and who can contribute unique value to design development, as well as the construction process. And there is nothing that would prevent you from putting pressure on your contractor to give you the best possible opportunity.
Copyright 2010 Jerry James
