How to Choose a Contractor

Choosing the right contractor to work with is the most important decision you will make regarding you construction project.  Having been in the industry for 20 years, I cannot count how many horror stories I have heard about people getting into a project with the wrong partner.  These negative experiences have such long term costs financially and emotionally which makes it quite surprising that these devastating situations are so easily avoidable.

 

Having listened to friends and other contacts relate dozens of these types of stories over the years drove me to always strive to create a better approach to construction.  This goal created the foundation of our company but many of these common sense ideas can be applied by you in any area of construction, in any locale, and regardless of which company you choose to deal with.  These are a few guiding principles that I suggest will help you find the right contractor to work with to ensure that your project is satisfying to you.

 

Rule 1:  Decide on who you are looking for

                  This may seem obvious but I cannot count how many times I have noticed this come up.  Honestly assess your priorities.  Is your ultimate goal to save money on the project?  If so then you are looking for a very small operation perhaps a one man show or an entrepreneur just starting out.  This approach will be less costly upfront as the contractor will have much less overhead but it means you must provide the leadership and oversight.  If you want to be in the middle of things guiding the decisions, the schedule, and perhaps using some of your own funds to provide the materials then this would be a good fit.  The benefits to this approach are the financial savings (assuming all goes well and that your guidance of the project is sufficient).  The drawbacks are that the project will take much longer to complete, the workmanship may be lacking (as many lessons and tricks are learned only after completing numerous projects), there is no risk protection for you the client (either in the form of WCB or extended liability insurance or a guaranteed cap on the cost of the project), and there is no recourse in the event that deficiencies appear after the contractor has been paid in full (a warranty is only as good as the reputation of the company offering it).

                  But perhaps upfront financial savings is not your primary goal.  Perhaps hiring somebody to take on your whole headache is your ultimate goal.  Then in that case I agree with your approach entirely.  I say this not only because these are the clients that we focus on but also because I am the exact same way.  Nobody can be an expert in every area of life.  I consider myself an expert in this arena (with 20 years of learning under my belt) but if my computer goes on the blink, or one of our machines breaks down, or when we decided to rebrand our company, the first thing I do is look for an expert that will take on the whole project and prevent me from having to learn a lot about that field.  The drawback is this approach may cost more on paper but that is more than offset (in my opinion) by the peace of mind that comes with knowing everything is being looked after by someone other than yourself.  This person (your contractor) will be pushing the schedule forward, dealing with the day to day stress of the job, and ultimately he or she should be protecting you from all different forms of risk (through various forms of insurance, a fixed price contract, and a bullet proof warranty that explains how everything would be handled in the event that something isn’t installed properly).

 

Rule 2:  Decide on a rough timeline and budget

                  How much time are you willing to be inconvenienced for your project?  Construction is often a noise, messy inconvenience at the best of times so choose how long you think you can live in that environment ahead of time.

                  Also, it may be difficult but try and get a number of what you can afford in mind.  You may say “but I have no idea how much a new driveway should cost”.  Well that is not the driving point here, the point is how much you can afford to budget for it.  In my opinion, there is no magic number that your project should cost but there is a magic number of what you can afford or what you feel comfortable with spending.  In my opinion the goal is not to find the contractor that will guess the right number and then give him the job.  Instead, the goal is to find the right contractor and then with his or her help find a way to design your project (whether by changing the square footage, changing the timeline, creating phases, switching products, etc) so that it fits within your predetermined budget.

 

Rule 3:  Approach three possible contractors

                  The only time I would not follow this rule is if you know someone personally that this contractor has worked for.  You have seen their workmanship and discussed with your friend, family member, etc. at length about their experience with the contractor.  Then you are basing your decision on your friend’s due diligence and experience but in all other cases get three estimates.

                  Do not be surprised when one of the estimates is double the cost of the other estimate.  This happens often and can be due to a number of issues.  Each contractor may have allowed for a different scope of work in the quote (thus comparing apples to oranges).  One may have access to a more cost effective supplier, dump site, etc.  As well, one may busier than the other so one has cut his price to keep his crews busy or the other has inflated his price because he does not need the work. 

The price is not the most important part of this step.  The level of detail provided in the quote is.  Which contractor delivered the quote at the time he/she committed to?  Who communicated the scope of work most clearly?  As silly as it sounds, look for everything from spelling to presentation.  This is the contractor’s first opportunity to set themselves apart from their competition so have they accomplished that?  If the quote was given to you on a crumpled piece of paper that speaks volumes about the company’s workmanship as does the company that presented you with a professionally printed document.  Our proposals are usually 10-12 pages in length and cover everything you can imagine about your project and hopefully a number of things you had not even thought of.

 

Rule 4: The follow through

                  After narrowing it down to one or two of those contractors, approach the candidate(s) and ask to be able to speak to one or two of their previous clients who had a similar project done.  This is not uncommon and most previous clients do not mind sharing openly about their experience with the contractor.  If the contractor cannot produce these two previous clients walk immediately.

                  Then discuss with the former clients any of your concerns and be sure to ask them:

1.     Would they use the contractor again?

2.     Did they start and complete on time?  If not, why?

3.     Did they charge you what you had agree upon in advance?  If not, why?

4.     Did they keep the site clean throughout the job?

5.     Did they work regular hours or did they disappear for days/weeks on end?  Did they finish every day at 3:00pm or did they work longer hours when required to get everything done according to the agreed upon schedule (I’m a big fan of the latter)

6.     What went wrong throughout the project and how did the contractor handle it?  Were they easy to discuss concerns with or did they respond by arguing/bullying?

 

Rule 5: Before you break ground

                  This is SO important that I am tempted to highlight this whole paragraph.  Before you proceed, get EVERYTHING in writing.  If your project is over $20,000 I would highly suggest getting a site plan of the existing site and a site plan of the proposed site.  This can usually be done for a few hundred dollars and eliminates confusion about what the agreed upon scope of work is.  These things should all be in writing:

1.     What products  will be used and square footages

2.     Project start date and anticipated completion date (allow 1 day per week for an overage meaning if the project is seven weeks long then plan on about 8 weeks to completion)

3.     The price should be written in the contract and what taxes will be charged on it (in BC it is just GST that should be added to it).

4.     The payment schedule (when will you be invoiced and when is payment due) and how can payments be made (credit card, cheque, etc)

5.     An explanation of what the warranty covers and for how long.

6.     A detailed explanation of how completion will be determined (who determines when the project is complete and how is that determined)

7.     As well you should have a copy of your contractor’s liability insurance (minimum of $2 million) and if in BC a clearance letter from WorkSafe BC (to show they are registered and up to date with workers compensation insurance)

8.     The contractor should explicitly commit to having dedicated workers on your site for the duration of the job.  Sometimes a contractor can take too much work on to keep his crews busy and just rotate them around numerous jobs.  Although this works well for the contractor, it means incredible headaches for the homeowner whose property is in total disarray without any workers onsite for weeks on end to put it all back together.

 

Rule 6: Upon completion

                  Before paying the final invoice, have the contractor issue you a Statutory Declaration.  This is a standard document in construction and it makes the owner of the company (or at least someone within the company who has intimate knowledge of the facts) make an oath that all materials, labour, and associated costs on your project have been paid in full.  Without this document you will have no recourse if a supplier says to you they were not paid for materials installed on your property.  Then you could be on the hook for the cost of those materials!

                  As well, have the contractor issue you a document with a date on it for what is agreed to be the date that the project was completed.  In the event of a warranty claim it will then be easy for you to prove if it occurred within your warranty coverage.

 

Final thoughts

·       Cash jobs – Personally I discourage this but if you decide to hire a contractor for cash acknowledge that although you save the initial cost of the taxes up front you could be open to some big headaches down the road.

·       Cost plus (or time and materials) vs. fixed price – I always recommend fixed price.  Then you know exactly what you are getting into.  If you like gambling and have a very high risk tolerance level then go for the cost plus approach but plan on spending at least 30% more than the cost plus estimate.  In 20 years I can only think of 4 times that I know of where a client saved money by going with the cost plus approach.

·       Two heads are better than one – I always recommend both partners (assuming there are two) meet with each contractor.  This allows for better brainstorming and two people will always have a better chance of picking a winner than somebody trying alone.

·       Trust your gut – This is much more important than we often think.  There are times where somebody just feels off or where for some strange reason someone feels very trustworthy.  I encourage you not to blindly make your decision based on that but feel free to follow it where it takes you.  This may mean hiring the most expensive because they feel like the best fit or hiring the one with the least experience because you can tell they will be the most committed.  Whatever comes up be open to listening to it.