How should I select a Contractor?

How many times are experienced contractors asked this very difficult and certainly emotionally biased charged question? The countless horror stories of individuals selecting the wrong contractor are certainly prevalent over the hiring of honest, competent and knowledgeable contractor stories. Why are there so many issues with contractors that have not performed to the expectation of the purchaser?

As an experienced contractor, with firsthand knowledge and exposure, to some of the finest contractors as well as some of the worst, I will try to answer this difficult question:

How should I select a Contractor?

Prior to answering this question, unless you have read my bio at the top of this website, my credentials are basically time and experience in the construction industry. Yes I am a graduate Civil Engineer, from a very reputable engineering school; however I have developed my opinions, by spending over 60 hours a week,for over 40 years of my professional life, in various aspects of construction. Based upon this exposure and history, I will answer this question. However, I warn you, other individuals, within this industry will probably strongly disagree with my comments and opinions. That’s fine, there are always several points of view, however, I would hope that my answer to this question will provide, at least, some interesting points of view and will open your eyes to “How should I select a Contractor? “

Let me start with my basic thought on this subject;

Price should be the least of your initial concerns and interest.

Price should be the least of your initial concerns and interest / did I repeat myself, it is worth repeating.

This comment is so important that I cannot repeat it enough to individuals contemplating the hiring of a contractor for a project.

The price should be the least of your concerns or interests. Any professional consultant, can be hired for their basic fee structure ( value per hour ), and they can provide you a comparable range of where the cost of your intended project scope should be. It is impossible for me on a general website to provide the answer to where the cost should be. As in other discussion within this website regarding cost, I have indicated the various parameters that make – up the cost of the project. For this discussion let’s simply summarize by indicating, location, competition, housing market, current oil prices, labor values, etc., etc. all parameters that vary throughout the country and the world. This is why a professional consultant, within the area you are considering performing your project, should be contacted for their local advice on estimating the value of the project. Our selected ( 3 ) contractors will eventually be asked to provide a value for the project, but there is a lot of work to perform, before we get to that point.

So if price is not the immediate concern, what characteristics should be considered in the selection of your contractor, sub-contractor or even architect and engineer.

  • Experience
  • Local reputation
  • Reputation of individuals ( employees ) working for the contractor.
  • Portfolio of similar projects
  • Recommendations from other purchasers regarding the contractor’s services.
  • Recommendations and comments by local vendors such as the lumber yards, the plumbing and electrical supply stores, etc.
  • Recommendation by local architects
  • If an architect is designing your project, their recommendation regarding local contractors.
  • Evaluations on websites specifically focused on establishing accurate and unbiased comments on local contractors.
  • City building inspectors / this is a contact that many individuals would never consider. However these inspectors interact with contractors all day long, they will have legitimate comments.
  • Other builders, if you have personal contacts with builders, sub-contractors, etc. then use them and ask for comments on other builders. Do no assume that all comments by builders will be bias against their competition. Many builders understand, how they comment about others will influence the recommendations going the other way.

Specific considerations to be investigated.

  • Does the contractor pay their bills / this can be found out through suppliers, the bank, local legal records at Town Hall. Are there liens against this builder which are an immediate indication that the contractor is not paying their bills.
  • Does the contractor have a change order reputation? There are many contractors who merely want to obtain the project, sign the contract and then investigate the opportunity for change orders. This is not the contractor you want to hire.
  • Does the contractor have a reputation for completing their projects on time and on the schedule presented in the contract documents? Many contractors do not understand, nor will they admit, to the importance of schedule. Depending upon your particular circumstance, the timing of the project may have financial implications, school year implications, etc.
  • Does the contractor communicate? A successful project starts and ends with communication. Does the contractor have a reputation of disappearing, once the contract is signed? Does the contractor enjoy interaction, or are they embarrassed to interact with the client?
  • Does the contractor have a reputation for problem solving and creative solutions to problems and construction issues? Or does the contractor feel that all the problems are yours, as the purchaser, and how you resolve them is your problem, not theirs?
  • Do subcontractors enjoy working with this builder, and do they recommend the use of this builder, or do they not pick up the phone, or hesitate to give any real information?

It is so important that the relationship between the purchaser and the contractor is established as a trusting and open relationship. I cannot stress this more! This relationship is everything, and the proper price will follow.

How to manage the selection of a contractor?

Develop what contractors call a “leveling sheet”

What is a leveling sheet? ( this discussion is offered in a separate discussion within this website), however in summary, and for use within this discussion, a leveling sheet, is simply a means of comparing the qualities of several contractors on a document, piece of paper, or excel spreadsheet, to simplify the selection of the most desirable contractor for your project.

Each separate contractor being evaluated should be designated by a column on the leveling sheet. The rows moving down the page would incorporate all the various questions and concerns that we have already established. A rating system from 1 to 5 should be used in determining the status of each contractor in regard to each question. An example of this would be, if Contractor A has a reputation for always paying their bills, they should be rated a 5. If Contractor B has several liens on their project, has the reputation for never paying their bills, they should be rated a 1. In this manner, the simple act of adding the columns up, and comparing the results, will easily and analytically determine which of the contractors lead the group, and which are at the bottom of the selection qualities.

Once the first ( 3 ) contractors are established, now we can start to look at cost. Cost should NOT be a factor until this analytical evaluation is performed.

Assuming that there are construction documents to present to the ( 3 ) top contractors, this will be the initial step to the final contractor selection. Construction documents in this case are drawing and specifications required identifying the scope of work for your project.

Each contractor should be given the opportunity to review the documents and provide a proposal, or not to exceed value, for the project. As I have described within the discussion regarding types of Residential Contracts, if the purchaser has selected a lump sum contract, ask the contractor for their lump sum value to perform the work, if the contract requires a GMP ( Guaranteed Maximum Price ), then request that this value be presented by the contractors.

It is at this point, together with the professional consultants opinion of the value of the project, as well as the resultant ( 3 ) contractors interpretation of price, the selection of a contractor becomes serious.

I am not suggesting that the selection, at this point, be simply decided by the lowest value. Each contractor should be interviewed by your professional consultant, if you have one engaged, or you, as the purchaser. By this point in the selection process you will have established a good understanding of the issues you would like to discuss with your prospective ( 3 ) finalists. I suggest that you not hesitate to include additional questions that you have established during your investigation of contractors and the creation of your final ( 3 ) contractors. I suggest that the following issues be incorporated within your contractor interviews.

  • How many projects due you have currently have contracted for?
  • Who will be the project manager on my project and will they be onsite everyday?
  • What qualifications does this project manager have and what projects has he completed for you
  • How often will you be invoicing the project?
  • Is there any issue with obtaining partial lien waivers, starting on the second payment for the project?
  • How long will the project require, and how confident are you that this schedule can be maintained?
  • What are your thoughts regarding penalty and award clauses?
  • Would you be willing to incorporate penalty and award clauses?
  • Are you willing to pay for any extended rental costs if the project has been delayed due to no fault of the owner? ( this is assuming that a temporary rental is required to accommodate the owner – mostly in terms or larger renovations, not new construction )
  • Are the documents adequate for you to apply for a Building Permit?
  • When can you commence work on the project?
  • Is there a down-payment required?
  • Can you supply us with a list of primary subcontractors that will be used on our project?
  • Can you supply us with a list of material and product suppliers for material to be used on our home?
  • Why would I decide to select you as the contractor for my home

It is important that you, as the purchaser have a confident and comfortable sense of communication as well as trust in your contractor. This will not be an easy process; there will be countless issues that will cause difficulty and friction between you and your contractor. If you feel uncomfortable now, it will get worse. So it is VERY important that there is a relationship at the beginning.

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