Start by asking the contractor for a list of their recent projects. Hopefully he has completed projects like yours in terms of size and project type.<\/p>\n
For example, you wouldn\u2019t want a TI contractor to do a ground-up construction or a small contractor to work on a multi-million dollar project.<\/p>\n
Call owners who have used this contractor before. Hopefully you get some positive feedback. You can also get a feel of the quality of work by visiting one of their current projects.<\/p>\n
If you’re investing in a hot market, make sure that the contractor doesn\u2019t have too much work on their plate. It isn’t unusual nowadays for a contractor to win too many jobs and become overwhelmed with work.<\/p>\n
For example, unaware of how many projects a paving contractor had won, we hired them for our ground-up development. A year later, when we were starting to install the pavers, the contractor didn\u2019t have enough manpower for our job anymore.<\/p>\n
It was a huge headache! I will explain how to resolve this issue in section four below.<\/p>\n
Related: <\/strong>7-Step Process for Finding Great Contractors for Home Renovations<\/a><\/em><\/p>\n When asking contractors to bid on your project, the best practice is to send them the same scope of work specifying the work and materials<\/strong>. This way, your bids will be apples to apples\u2014not based on the contractors\u2019 speculation.<\/p>\n For example, if you want to do engineered wood flooring with glue down application, then put that in the scope so the contractor doesn\u2019t give you a quote for floating floor or something different.<\/p>\n If a bid is significantly lower than the others, don\u2019t jump the gun and hire that contractor right away.<\/strong> Give him a call to go over the scope. Then you don\u2019t have to argue with them in the future over changed orders, which will cost you additional money and may even delay the schedule.<\/p>\n If you already went over the scope with them and everything checks out, then consider hiring the person. But make sure you set aside a contingency just in case. The reserves will come in handy if the contractor runs out of money later on to pay its suppliers or subcontractors.<\/p>\n Unless it\u2019s a small scope, I recommend getting three different bids.<\/p>\n Negotiation is not easy, especially when the contractor is more knowledgeable than you. They are all experts of their own trades after all.<\/p>\n Your best bet is to ask the contractor to run you through the costs by breaking down and justifying the numbers.<\/strong><\/p>\n Let\u2019s look at this scenario: A contractor gives you a change order for extra work that they have completed without your request.<\/p>\n In this case, the contractor is technically at fault for performing extra work without authorization, but you should treat the contractor fairly by negotiating for a reasonable price. The last thing you want during construction is ruining your relationship with the contractor.<\/p>\n To negotiate for a reasonable price, ask the contractor for the time and material (T&M) tickets<\/strong>, which are used to track the daily labor and material costs to complete the extra work. If there are no T&M tickets, then walk the job with the contractor to get a good understanding of the additional work. Ask him to justify the hours and cost.<\/p>\n Related: <\/em><\/strong>Flipping Houses\u2014The Ultimate Step by Step Guide<\/em><\/a><\/p>\n Let\u2019s say one of the contractors is delaying your project, now what do you do?<\/p>\n For example, the paving contractor I mentioned earlier didn\u2019t provide enough manpower to our project. They sent three workers to our job site when we needed at least 10. I emailed and called the contractor several times in the first week, but they showed little to no improvement.<\/p>\n At this point, you want to immediately put him on notice. Include these important elements when doing so:<\/strong><\/p>\n After you\u2019ve put your contractor on notice, if they still don\u2019t perform by the target date, then you can now formally send them a delay notice<\/strong>. In the delay notice to the contractor, you can state that you\u2019ll either supplement their crew and back charge him for the cost, or you\u2019ll take away their scope completely and give it to another contractor.<\/p>\n As you can see, the whole process takes about a week and a half before you can start taking the scope away from the contractor. Document the contractor’s progress diligently. However, don’t take away their scope too quickly<\/strong>, because if you end up in court for a dispute, you want to show that you’ve given the contractor sufficient time to perform.<\/p>\n I also recommend saving all the emails and photos in a folder, so they are easily accessible when you do get into a lawsuit.<\/p>\n Besides schedule delays, there are couple other issues that you may want to back charge a contractor for:<\/strong><\/p>\n For the scenarios above, you should send an email out, stating that the contractor has 24 hours to correct their work. Follow the email with a phone call<\/strong>. Note that 24 hours is not a lot of time to react, so give the contractor at least 48 if the work is not critical to your schedule.<\/p>\n Lastly, make sure to take photos for documentation purposes.<\/p>\n In order to take actions that I mentioned in sections four and five, you need to include in your contract language your rights as the owner to take these actions after putting the contractor on notice.<\/p>\n2. Comparing Contractor\u2019s Bids<\/h2>\n
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<\/p>\n3. Negotiating Costs<\/h2>\n
4. Document Schedule Delays<\/h2>\n
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<\/p>\n5. Back Charge a Contractor<\/h2>\n
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6. Contract Language<\/h2>\n
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