8 Things to Consider with your Contractor in building your project:
8. SHOW ME THE LICENSE.
Not every state requires licensure of contractors. Florida certainly does. Most states have a website that will allow you to look up licenses from an online database. The Florida website is here: https://www.myfloridalicense.com/wl11.asp Look on this website or call the licensing board and confirm that no disciplinary action has been taken against the licensee.
FYI, an occupational license is not sufficient in ANY construction trade.
7. SHOW ME THE INSURANCE
This is such an easy thing to overlook. Do not do that! Why? Let’s say an uninsured “handyman” comes to work on your house- maybe your roof is leaking. The “handyman” climbs onto your roof, proceeds to lose his footing, falls off your roof and breaks his back. Now what? That “handyman” can take you for a wild ride is what and you WILL be responsible. It will be an insurance claim against YOUR insurance. This is EASY to avoid. Ask for a copy of their certificate of insurance. But that’s not enough. Unfortunately in this day in age con-men are prepared for this question and I have seen companies try to pass off expired certificates as valid, I’ve seen forged copies of insurance, some scams run as far as having their insurance active just long enough to get a certificate of insurance for you and then cancel the policy. Seems ludicrous but it happens. Be diligent, follow up, talk to their carrier and make SURE the policy is active. Look for both liability and worker’s compensation insurance coverage. If you bring them on board for your contract, insist on being named an “additional insured.”
6. WHO WILL DO THE WORK
Ask your contractor specifics about your project. Ask about how the workload will be divided - what portions of the work will the contractor perform himself and what portion of this work will be completed by a subcontractor. Ask who will supervise the work. Ask for the name of the Superintendent and Project Manager that will handle your job. Ask specifically what vendors will be supplying materials for your job. There is also another reason why you want a detailed list of subcontractors and vendors on your job- see #5.
5. HOW TO PAY A CONTRACTOR
When your contractor submits a pay requisition you need to do a few things before you submit payment. In #6 we talked about requiring a detailed list of subcontractors and vendors. You need to know who is working on your job so that you know who needs to be paid. You may be getting in the mail a piece of paper called “Notice to Owner.” Many people have no idea what this is so they ignore it. Please don’t do this! Think of it this way- a “Notice to Owner (NTO)” comes from somebody who has been working on or supplied material to your project. The NTO is a notice that a battle will likely be coming in the event that they are not paid. What kind of battle? Lien laws vary state to state but for the most part, the general contractor, subcontractor or vendor/ supplier can and will put a lien on your property if they are not paid. If 3 suppliers send you a NTO but your contractor only pays 2 of them, you very well may be out of luck and forced to pay for the material again.
How do you prevent this from happening? It is a very simple process but one that you must take to protect yourself and the interest of your project. Require of your contractor to submit a LIEN RELEASE from everyone on the job for that pay period when they submit their requisition. The release will be dated and good through a certain date- typically month to month. Do not release the check until you have a LIEN RELEASE from everyone, period.
The next thing to consider before giving your contractor a check is retainage. Retainage is something that should be addressed prior to signing a contract. Retainage is an agreement that you will hold a percentage of EVERY payment until the work has been satisfactorily and substantially complete. Retainage is typically withheld at a rate of 10%. If your contractor balks or argues with you about withholding retainage, find another contractor! Retainage is an every day occurrence in the construction world. Do not let them tell you otherwise- and some probably will try.
Also be wary of ANY contractor that asks to be paid in cash or asks for a percentage of money upfront.
Do not release final payment or retainage until all permits have been signed off and the quality and craftsmanship is satisfactory to you.
Also, ask the contractor before the project begins for a schedule of the work to be completed and a draw schedule or cash draw down schedule. This can be a useful tool to ensure your project is on time and that you are paying for work that has just been completed.
4. SCHEDULING THE WORK
This may be one of the most underrated or most overlooked aspects of working with a contractor. I can almost guarantee you that somewhere along the line somebody on your job is not going to show up when they are scheduled to. It IS going to happen.
Discuss this with your contractor up front. Ask him about missed work days. Ask how they deal with delays in the schedule and what plan of action they will take to get your job back on schedule. It will depend on what type of contract agreement you have in place with your contractor, but if overtime is required to get the job back on track, that onus is on the contractor, not your pocketbook. Remember that! This is also a good opportunity to address problem/ dispute resolution. Ask how they handle possible conflicts and their answer shouldn’t make you squirm. A reputable contractor is going to want your repeat business and a quality reference from you. If their approach to dispute resolution is middle finger management, it is going to be a long road.
In some cases making work up with overtime is not possible. Again it depends on the project but if you have workers remodeling your home and their work day is say- 7:30-3:30, you’re not going to want your house full of people working at 6:00 p.m. when you are home from work and ready to unwind. The only way around it in this scenario is to add manpower during the regular scheduled work hours. Again, it is not your responsibility to absorb this cost. That responsibility lies with the contractor.
What about weather delays? Again this will depend on the contract agreement you have in place but your contractor should account for some minor delays or rain days included in his/her schedule. You can look at an almanac, determine the average expected rainfall for your project duration and adjust the schedule at Day 1 accordingly. If you get an abnormal number of rain days your contractor may talk to you about the impact of a schedule- if you have a proactive contractor who has communication with you on his mind. For the most part, they aren’t going to say a thing unless you do. Don’t let rain be an excuse. Rain is no surprise. Plan for it, schedule for it, and when it doesn’t rain maybe you gain some time or get ahead in your schedule.
Schedule can be a #1 indicator of job cost. In the construction industry (and most other industries as well) time is money.
3. COMMUNICATION
A “proactive contractor” is someone with communication with you on his mind. Most contractors are not rooted in customer service. Most contractors are not proactive and certainly most contractors do not make communication with you the project owner a top priority. Why? The excuse I hear most often is that it takes effort and time. In reality it shouldn’t take anymore effort and nothing more than the time of a daily report, weekly report, or a phone call. A contractor that is up on the details of your project doesn’t have to spend any extra time or effort to communicate an update to you. It is when you have a litany of unanswered questions or “let me get back to you on that” that you might need to be alarmed. The project manager should be hands on and relevant. What does that mean? A project manager can’t manage your job remotely. He/She has to show up every day to check progress. If you find yourself talking to somebody who you have never met or never or rarely is on site, know that you need to be on your toes and paying full attention to every detail.
2. QUALIFICATIONS
Due diligence is a must if you are going to have a successful project. You need to ensure the contractor you are considering is qualified to do the work you need performed. You wouldn’t want a NASA engineer to do dentistry work on your teeth. You don’t want a utility contractor hanging your crown molding either. Check the work history of the contractor you are considering. Require a set of professional references and a list of previous projects. If somebody is unhappy with the work their contractor did, they will tell you this for sure- IF you take the time to call and ask the question.
1. CHECK REFERENCES
This one is kind of obvious I think. I don’t think you can complete the tips above if you’re not prepared to check references. Make sure the project was finished on time according to the original schedule. If there were any delays in project completion from the original scheduled date- find out why. Ask if there were any problems or conflicts on the job and how were they handled. Ask about the budget- was the work completed within the terms of the original budget. Again, if it wasn’t, find out why.
Take the time to learn about their professionalism. Ask detailed questions of the references: Did the contractor maintain a neat job-site? Was it safe? Did anyone get hurt? Did they take time to put protective foot coverings on their boots or did they track mud all over your house? These are the details that make all the difference when someone is working in your home and these are the separators that qualify a quality contractor.
I realize these tasks may be a bit daunting. They certainly can be. If you are not up for the challenge or do not have time to manage these details, considering hiring an Owner’s Representative to do this legwork for you. If you have any questions about this article or want to inquire about Owner’s Representative Services, feel free to email me at anytime.
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