6. Level of Experience

Many seasoned contractors will denigrate the “new guy on the block,” but all of us were new to this industry at one time. Whether new or seasoned, the contractor should be willing to share the level of experience they have in the industry and in particular to the job you are asking them to complete. A higher level of experience contributes greatly to the job.

There are many questions you can ask to better understand the contractor’s level of experience. How long has he been in business? Has he performed a number of jobs like the job you are considering? Ask to see examples or pictures of jobs similar to yours and to visit past and current jobs. Talk about the quality of the work and decide if it will meet your standards. Interview past customers who had jobs like yours completed by the contractor. An experienced contractor should be able to offer a wide array of options, thus demonstrating knowledge of and experience with a variety of products, materials and techniques.

Does the contractor have a working knowledge of the many types and ages of homes in the area? Knowing what is likely to be behind a wall or under a floor helps the contractor provide reliable estimates. An extremely low bid may indicate lack of experience or an inability to later cover the actual costs involved in the job.

If a contractor underestimates costs of too many jobs, they will ultimately go out of business. Nine out of ten businesses in our industry fail in the first five years. Little or no experience is the most common cause of business failure. If your contractor goes out of business halfway through your project, it will be very difficult for another contractor to take over where he left off. The first contractor may have used materials or techniques that are not familiar to the second contractor. Plus, unless there are very specific drawings, the second contractor may not understand your wishes in the same way that the first contractor did.

Ratings

Unacceptable: The contractor hasn’t picked a niche yet because his business is too new and he is inexperienced. This contractor will go on every lead and take every job and then figure out how to do it.

Good: The contractor’s business is developed enough that he knows his core competencies and only follows leads that his business can handle.

Better: The contractor has picked a niche, is very focused on what his business does and knows they are good at it. The business has lead qualification systems that help the contractor rate and determine if a particular lead “fits” their company.

Best: The contractor has a clear picture of his niche, brands his business in this niche and works to develop a public image within this niche.

Check out the other 24 factors that every smart house-owner use when they consider their remodeling contractor here.

5. The Contract

After all decisions have been made, the design has been completed and the negotiations have taken place, the contractor of choice is usually asked to put together a contract. The contract should be in writing and, at a minimum, should include (1) a summary of work; (2) provisions for permits; (3) estimated start and completion dates;

• provisions and procedures for handling Change Orders; (5) the schedule of payments; (6) a Lien Notice; (7) the Notice of Cancellation and (8) Warranties.

A “summary of work” can take many forms. Some contractors list all work included in the proposal, some have an estimating system that breaks the work into categories to share with the owner, some write a detailed description of all of the elements involved in the project, some refer to the drawings or plans for the details of the project and some use a combination of the above options. The intent is to convey the scope of the work as clearly as possible so all parties understand what the finished project will look like. Some contractors also go out of their way to list the things that are not included in the proposal, further eliminating the possibility of a misunderstanding. I can’t emphasize enough how important it is to review the contract and have a clear understanding of its contents. If something is unclear, take the time to ask the questions and clarify all aspects of the contract.

The provision for the acquisition of permits should include an understanding of who is responsible to pull the necessary permits and call for the required inspections. There are only a handful of small jobs that do not require a permit. Check with the governing bodies to determine the thresholds in your jurisdiction. The person or company pulling the permit is responsible for all of the permitted work. If a contractor is unwilling to provide the permit, it could be an indication they are not licensed or are unwilling to do the work in a manner that will pass code. If you agree to pull the permit, you will be held responsible for all of the work being done to code and you will be responsible for additional costs of anything required by the inspection process.

The starting and completion dates should be a part of every contract. Delays can and do occur, so a statement allowing for reasonable delays is a good idea.

The provision for Change Orders is a necessary clause in every contract. This is an agreement that the contract cannot be modified without the written consent of both parties.

The schedule of payments is an area that often comes into play with unsatisfying relationships. The payment schedule should be tied to performance and risk exposure on the job. A down payment is customary, but should not be more than a small percentage of the total job. There are situations where a large order of custom cabinets or special order of windows (as examples) can affect the amount of the down payment. Any contractor who insists on a large down payment, with no obvious explanation, should be avoided. On the other hand, many contractors are small businesses with the need for cash flow to buy materials and pay wages. In this case, you should set up a schedule that reflects the work done to date. The ideal is to have an even balance between what has been accomplished and what you have paid. The situation to avoid is one where the contractor has collected the bulk of the money and has little or no incentive to complete the project in a timely manner, especially if some things have started to go wrong. There are many fair ways to schedule the payments that satisfy both the owner and the contractor. Some contracts have a “holdback clause.” This allows you to withhold a final payment (usually about 10%) until sometime after the job is completed, allowing you to inspect the work. If there are any problems, this can serve as incentive for the contractor to remedy them.

The contract should outline all pertinent information about guarantees and/or warranties. A professional remodeling contractor guarantees all workmanship for a specific length of time and extends the warranties offered by the material suppliers and the equipment manufacturers. Every state has laws regarding the length of time certain warranties on workmanship are in effect. Do your homework and understand fully the extent to which your project is covered by warranties or guarantees.

The above outline is intended to capture the most essential elements needed. The time it takes to have a sound understanding of what is outlined in a well written proposal is time well spent. No one wants to argue over petty misunderstandings and create an adversarial relationship.

Ratings

Unacceptable: The Contract and Change Orders are verbal, rather than written. Nothing is documented. Any one of the above elements is missing or dismissed as unimportant. Issues are poorly covered in the document. Statements are vague and confusing.

Good: The contractor produces a proposal that includes all of the above elements. Any blank spaces to put in dates, amounts, or choices are filled in so nothing is left to chance later.

Better: In addition to the above, the contractor has formal, complete and professional contract documents and explains all of them thoroughly, creating a complete understanding of the project and all related elements.

Best: In addition to the above, the contractor has systems and procedures that they follow for every element of the contract process. This attention to detail and thoroughness makes every part of the contract relationship predictable. In the end, all of the contract documents are positioned to eliminate misunderstandings or surprises.

Check out the other 24 factors that every smart house-owner use when they consider their remodeling contractor here.

4. Completeness of the Estimate

One of the most confusing stages of dealing with a contractor can be “getting bids.” Different people attach different meanings to words, and it can be very confusing to consumers and contractors alike. There are subtle differences between the words bid, estimate, proposal and contract. A bid is an offer to do something, with certain conditions, for a certain (usually) lump sum price. An estimate is a calculation or judgment – a written statement giving the likely price that will be charged for specified work. A proposal is an offer, a proposition (price) for something, i.e. for this money, we will do this work. Some proposals include an allowance. An allowance can be a lump sum number, such as “$8000.00 for appliances.” An allowance can also be for a unit cost of material, such as “$4.00 per square foot material cost for ceramic tile.” An allowance is usually given because an exact product, process, or type of material has not yet been determined. A bid or estimate is usually the first step in determining the conditions of a project, and all it tells you is the projected cost of the project. The bid or estimate is usually followed by a proposal. A proposal outlines all of the other terms and conditions that will be included in the final agreement between the parties. The contract is the final agreement between the parties. The next section of this paper is devoted to the things that should be in the contract.

Homeowners are always cautioned against accepting a verbal bid. Many contractors will verbally tell you what things cost, pulling these numbers from experience or price books they have acquired over the years. The caution applies to accepting a verbal quote as “the contract.” Always do business with all elements in writing in a binding contract. Verbal statements never hold up in court. That is where the expression “he said, she said” comes from. A judge has a hard time knowing who to believe or who is telling the truth. Beware of contractors who refuse to give a written estimate or contract.

A reputable contractor will not give you a sketchy proposal on the back of an envelope. He prepares a comprehensive set of material and labor specifications, carefully estimates costs and offers you a detailed proposal, at a package price, covering every aspect of the job from removal of existing materials to a thorough clean-up when the job is done. Some contractors choose to leave certain items out of their proposal, either because they do not choose to perform that line of work or because they are trying to make their proposal less costly.

Homeowners are always encouraged to obtain several bids, and most contractors will give homeowners an estimate of what they think the project will cost. It isn’t until all of the details have been determined that a contractor can give a firm bid on the whole project. The smaller and less complicated the project, the easier it is for the contractor to put together an estimate. When the project is more complex, involves design and/or has unique specifications, many contractors charge for estimates. Nailing down all of the details, getting bids from trade partners, finding products that satisfy the customer and designing the details of the project take a long time and involve a lot of work. Assuming that all contractors are supplying the same quality materials and performing the same labor, there shouldn’t be big differences in the bids. Even allowing for shrewd buying and greater efficiency on the part of one contractor over the others, there shouldn’t be more than a 10%-15% difference between the high and low bids. View bids from contractors that are way higher or way lower as bids that might be suspect or need extra understanding to explain the differences.

Ratings

Unacceptable: You are sure to have trouble if you accept verbal estimates because nothing is documented and everything is left to chance. Be cautious if a contractor leaves whole areas of work out of the bid. Some contractors put in very small allowances for things like fixtures or appliances. Again, this could be to keep their bid the lowest. Some contractors minimize the job on the front end and then write a lot of Change Orders for extras, making the project cost a lot more than initially expected.

Good: The contractor listens carefully to the customer’s wishes, offers good suggestions and produces a bid that includes all the elements of the project for which the homeowner asked.

Better: In addition to the above, the contractor has a system for checking off all the elements that are necessary to complete this type of project. The contractor produces a document that makes it clear what the estimate or bid is based on, shows you samples, has you pick out elements of the project at showrooms or on websites and helps you understand what you will get for what you want to spend.

Best: In addition to the above, the contractor specifies in detail the make, model, and color of the pieces of the project. He keeps the design and estimate reflective of each other. The contractor usually has a way to show what the parts of the project cost, i.e. with a line-item estimate, so that the customer has a clear understanding of the elements that drive the total costs associated with the project. The contractor is willing to share constructive ideas with the customers about decisions that will help the project meet budget. The allowances in the proposal are adequate to purchase the products desired in the project.

Check out the other 24 factors that every smart house-owner use when they consider their remodeling contractor here.

3. Reputation

A contractor’s reputation is one of his most valuable assets. A good contractor is very willing to share his reputation with his future clients. Does the contractor have a record of unresolved complaints with the Better Business Bureau (BBB) or other associations, like the City License Bureau, the State Department of Commerce or with any of his clients or competitors? These agencies investigate complaints from consumers alleging violations of laws and rules, and when necessary, take disciplinary action against a contractor’s license.

How does the BBB work? When the BBB receives a complaint, it presents the complaint to the business and requests its assistance in working out the problem with the unhappy customer. Most companies are grateful for the opportunity to resolve problems with their customers since it often means their patronage will be preserved.

• members agree to respond to consumer complaints presented by the BBB, and lose their membership if they do not. Most other companies, regardless of whether they are BBB members, also cooperate with the BBB because the BBB can still report on a company if they are not a member. Your local BBB is listed in the telephone book and online at Minnesota.BBB.org.

A reputation is something that sticks with a contractor for years. It takes years of reliable work, many satisfied customers and enduring relationships with suppliers to build up a good reputation. Conversely, it takes years of shoddy work, unsatisfied customers and adversarial relationships with suppliers to create a bad reputation. If a trusted friend, colleague, family member or supplier tries to steer you away from a contractor or is vague on the details, listen to your gut! Since contractors don’t receive report cards, this is a very important part of finding out about them. Every contractor has a reputation.

Ratings

Unacceptable: The contractor doesn’t have any references that he is willing to share, or hasn’t been in business long enough to have any references. The contractor has a history of being in small claims court with customers or suppliers. The contractor has a reputation of not paying his subs or suppliers timely or at all. The contractor doesn’t have a standing in the community, no one has heard of him, no one knows of the company and no one has had a relationship with him.

Good: The contractor will give references upon request. These references may or may not be recent and may or may not be related to the project you are considering.

Better: The contractor has a list of references for recent jobs that are like your job and willingly shares them with you.

Best: The contractor has many references, has testimonials from past customers who had projects like yours and exhibits a history of pleasing his customers and completing his jobs in a satisfactory manner. Any problems that may have arisen have been resolved in a positive manner. People in the better or best categories understand the idea of reputation and are proactive in maintaining a good reputation.

Check out the other 24 factors that every smart house-owner use when they consider their remodeling contractor here.

2. Price

The other piece of advice given most often to consumers is: “Get several bids to compare prices.” It is important to understand the pitfalls of only considering price. In order for you to accurately compare price, all bids must be for the same project, products, specifications and quality of work. This is almost impossible to realize. If you took one small, easily definable part of the project and asked a couple of contractors how much they would charge for that element of the project, most contractors would try very hard to give you what you want at the price you want to pay. They may even find cheap products and inexpensive trade partners to help you meet your budget. Remember that the bid is only the starting point in your negotiations with the contractor.

Keep in mind that the lowest bid may not necessarily be the best bid, and that an unusually low bid may be cause for alarm. Perhaps the contractor did not fully understand the project’s scope. He may be inexperienced and underestimated the amount of labor and materials required or may be planning to cut corners by using inferior materials, low-paid, inexperienced workers, or by not following local building codes. Contractors may play a little game, giving you a bid for something that is slightly different from their competitor’s so that you can’t compare evenly. A good contractor will listen to you and be respectful of your budget. He won’t try to sell you things you don’t ask for or that are different than what you want.

Ratings

Unacceptable: The contractor gives you a dollar amount on the back of a business card, or hand-writes a one-page proposal that is short on details. The contractor presents a very low bid (to get the job) and then adds in extras which weren’t included in the original bid or are upgrades from the allowances.

Good: The contractor prepares a complete proposal that refers to plans and gives you a “Notice of Cancellation” and a Lien Notice.

Better: The contractor has a presentation that breaks down different areas, allowances are clearly spelled out, options are clearly outlined, plans accompany the proposal and the proposal names specific brands and models.

Best: In addition to the above, the contractor has a system for design and estimating and presents all costs associated with this process. He helps establish a budget with which you are comfortable, shares design ideas with you, provides a line-item estimate, and helps you understand how your decisions affect the cost.

Check out the other 24 factors that every smart house-owner use when they consider their remodeling contractor here.