How to manage contractors

Question

I find myself mismanaging contractors again and again. I keep making different, sometimes the same, errors. It's really frustrating to think and plan one way and things turn out differently. I worked with more than 20 different contractors and it seems to me that most of them are not honest and that they can't be trusted. I'm reaching out for an advice or book recommendation or anything that can help me to resolve this issue.

In the areas that I'm investing is very difficult to find any contractors to begin with.

Thanks in advance.

In the areas that I'm investing is very difficult to find any contractors to begin with.

Thanks in advance.

Konstantin Boubev · Answer

@Joseph Ghobrial

The common problems I experience are:

1. Having the contractors complete the work on time, honoring the terms  of the contract

2. Going over budget all the time

3. Quality of work completed

Since, I'm not able to supervise the work, I find myself dealing with lack of integrity. For example, one contractor run the plumbing lines underneath the floor. In addition, instead of connecting the plumbing lines to the septic, he run them into the ground.

Patrick Harrington · Answer

I find a lot of the time to owner does not provid a good scope of work for the bid process and as the the job moves forward. Or really does not even know what they want or need down. As the owner you can help the contractor bid the work correctly and understand what you want done and with in the time frame if you spell it out up front. I would work on your scope of work upfront and that should help the project run more smoothly and hopefully stay on budget.

Greg Parker · Answer

When the contractors give you the quote, have them break it down into sections.  Example:  total price for re-tile a kitchen floor $3,000.  Write it up like this, 500 when material is delivered, 500 when old tile is removed, 1,000 when new tile installed, 1,000 when grouted and cleaned up.  Basically a draw schedule will keep everyone honest.

Joseph Ghobrial · Answer

I would suggest being a bit more detailed as to what difficulties you are having with the contractors so we can be more helpful. How exactly are they not being honest? Is it about their schedule? What is it exactly? Aside from increasing your budget, I would have an agreement between the contractor and you, written by the lawyer, detailing everything you need. That ensures that things go smoothly. Regarding keeping on schedule, the lawyer would put a fee for $150/day for every day they are late. Of course, you want to give them some breathing room and allow for circumstances outside of his or her control like emergencies and the like. They will likely change the quoted price a bit knowing that there is a serious deadline.

Logan Russell · Answer

You may need to increase your budget for a contractor. Good ones are out there but your not going to hire them for $30/hour.

Patrick Harrington · Answer

I find a lot of the time to owner does not provid a good scope of work for the bid process and as the the job moves forward. Or really does not even know what they want or need down. As the owner you can help the contractor bid the work correctly and understand what you want done and with in the time frame if you spell it out up front. I would work on your scope of work upfront and that should help the project run more smoothly and hopefully stay on budget.

Joseph Ghobrial · Answer

What I mentioned above about writing a contract with a lawyer with a daily late fee will completely circumvent #1.

Regarding #2, sometimes this invariably happens because of unseen issues. It is normal to pay for things that just simply were not expected. That is why you should have 15% of the rehab set aside as a contingency. Now, in some cases, the contractors are just BSing and are out to get you. This is easy circumvented if you have a very detailed scope of work, where the agreement is signed with a lawyer so it has a feeling of seriousness with it. If you can give a couple of examples of them charging more, we should be able to better help.

Regarding #3, you can't change that, humans are creatures of habits. I argued with one contractor before and he replied: "everyone has their own way of working." I paid more than enough for another contractor thinking he will deliver a quality job, they did everything wrong and did not properly follow instructions (wrong design), gave their word on something that they didn't do, and everything was just a mess. The quality of work was just terrible. When I confronted them about it, they said I did not pay them enough for the job. I told them, I did not even negotiate with you, why didn't you ask for more, I would have given you if you simply requested? They had nothing to say because they were in the wrong. And I paid them good too. It was no surprise that they just hired someone for minimum wage who had no experience at all, regardless of how much I would have paid them.

In the end, all you can do to control #3 is to hire quality contractors who have a solid reputation. Shop around very carefully, ask them to show you properties that they have worked on (this is a must, pictures can lie). Read reviews on the internet. And stay away from recommendations, I have been burned a couple of times by recommendations. Vet them thoroughly. Unfortunately, this takes time, and the quality contractors always demand more money (in part because it takes longer to do quality work and in part because they have a high demand for their expertise). Getting contractors for less almost always leads to shortcuts which lead to issues. Almost always, there is a reason why they charge less or accept less, their quality of work is just not that great. In most cases, they will run to other jobs and leave yours as the last priority. It is important to remember that contractors are not employees, they can charge whatever they want depending on how good their quality is. Bad ones will cost less, the good ones will cost more. It is as simple as that.

Founder, Refix Real Estate

Nik S. · Answer

@Konstantin Boubev

I know the feeling. Just as many others, we’ve all seen a lot and will continue to see more. The industry itself is tough.

It took a little time but I found a crew that had more positive attributes than negatives. They are fair with prices,  there work is pretty solid but they work slow (and some other quirks). I try to keep them as busy as possible so we keep the relationship going. Sometimes the known is better than the unknown :-)

Truthfully, I don’t like the management aspect of the business but it’s just part of the game.

Good luck!

Joseph Ghobrial · Answer

Yes, everything should be written out as detailed as possible, itemized with each cost. It should all be signed on as a contract.

Konstantin Boubev · Answer

@Logan Russell

Thanks for the advice.

How to manage contractors

Most Popular Reply