What to do When Your Contractor Seems to be Getting Slower and Slower

[Allan Smith]

Investors have all been there. Your build or reno started good if not great, but you're starting to perceive a slow down. When you stop by the job, there's less people there working or not there at all, the invoices are getting smaller and farther apart, and progress in general is concerning. What gives?

Let me know if you want to hear more about why this happens, but let's get to the point. My assumption is that the project is getting behind schedule. It takes a little construction knowledge, but if they are slower but still near schedule, it's best to let sleeping dogs lie.

1. Start with a casual conversation with the contractor about what you've noticed. Depending on your relationship, this might be a fired-off text, or it could be brought up at a weekly call. This alone can get the fire lit under them to move quicker now that they feel eyes on them. It also should bring light to any issues that have been under the radar such as the GC losing a key employee, etc.

2. You can also layer on a quick audit of your own side. Are you making snappy payments or paying on the last day or even late? Have you recently had a large change order or several over the past few weeks? Does the contractor know you appreciate his work? Does the contractor have a clear set of plans and designs to use so he can get to work running the rest of the project? I know it sounds a bit "soft" but contractors are people too! =D Grease in the gears can help, though it should never be required!

3. If other measures are not having an affect, start Operation Follow Up. Text/call regularly depending on the nature of the work: roughly, take the full timeline, divide by 20, and start following up that often. Be polite and professional, but firm and consistent. Yes, you are now annoying, but it only gets worse from here if they don't do their job. Try this for a while.

4. This is about when I like to start on my back up plan: Get quotes from other contractors to finish. Start earlier than you think because this is a hairy process that takes a lot of time to find GCs willing to take on someone else's project, get a bid, and so on. If you call a GC like SkyDev, you will almost certainly learn some things about the situation, such as tricky aspects of transitioning to a new GC.

5. Fire your GC. This is typically not difficult to find grounds in the contract to do so, the difficult part is settling up the financial differences. They will send you a final invoice that is almost guaranteed to be higher than you expected and quite frankly, probably too high. There are A LOT of nuances to this process.

6. I hate involving lawyers but if you are someone who sees value in it, you could even skip #5 and have a lawyer send a letter. This would be more necessary if the GC "got out ahead of you" on payments where work has not been delivered that you paid for. Then we are talking about getting into litigation. In my opinion it's way better to settle up with the GC and get them out of there so you can move on with your life.

The key sentiment I want to conclude with is to keep tabs on a slowing project from the very beginning. Give some grace, but watch closely, and move to a resolution early. I've heard from WAY too many other investors that they kept waiting and hoping, and in hindsight they greatly wish they had pulled the plug way earlier.

[Alan F.]

Quote from @Bruce Woodruff:

Speaking from the Contractor side......I got my first (of many) licenses in 1983...., the problem many/most times is not the GC, but the customer. 

Late payments, no payments, arguing over Change Orders, not paying Change Orders when signing them, and the big one nowadays:

Constant changes to work, even beyond CO's. Customers come onto the job site after the Contractor has left and sit with their friends drinking wine and thinking up changes. This got far worse after the advent of HGTV

And when a project slows down - for any reason - what does a Contractor HAVE TO do? He has to take on another project...not to make $$ for himself...to keep his own employees and subcontractor's income rolling in.

There are bad Contractors out there, but they can be easily weeded out by following the few simple safeguards that everyone can do (but many do not). So let's spread around the blame....I'd definitely put at least 50% of the blame right on the customer.

This! Resi work in general sucks lol. I much prefer commercial/industrial, the customers are far more professional.