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Learn the ins and outs of selecting and hiring a contractor.

Homeowners may want to consider shopping around for contractors before beginning any construction project. [© Jupiter Images, 2010]
© Jupiter Images, 2010
Homeowners may want to consider shopping around for contractors before beginning any construction project.

When undertaking construction projects around the house, individuals may want to consider hiring professional help. Contractors can be a tremendous resource because of their expertise and knowledge of product options and building codes. However, not all contractors bring the same amount of expertise to a home addition or a kitchen or bathroom remodeling.

Compile a List of Potential Contractors

Homeowners may want to consider shopping around for contractors before beginning any construction project. Experts at This Old House recommend that homeowners begin by asking trusted sources about contractors they have used. These can be family members or friends, local building inspectors, and employees of local home improvement centers or lumberyards. The sources may not only know which contractors do the best work, they may also be familiar with which contractors pay their bills on time and buy quality materials.

Interview Potential Contractors

After compiling a list of possible contractors, a homeowner may want to consider conducting phone interviews with each contractor on the list. These brief conversations may help determine the following:

  • if the contractors typically work on projects like the one being considered
  • if the contractors can provide a list of references (not only from other homeowners for whom they have done similar work, but also from suppliers of materials)
  • whether the contractors have multiple projects being handled at the same time and, if so, how many
  • the length of time they have worked with any subcontractors they would use for the job

Because some states require that construction contractors be bonded and licensed, the National Association of the Remodeling Industry (NARI) advises homeowners to contact the proper authorities to ensure the contractor has the necessary credentials.

Next, the homeowner should consider meeting in person with the leading candidates. At this meeting, the homeowner should determine if the contractor can listen and communicate well and if he or she understands the client's needs. Once a homeowner narrows the list of candidates to one or two, he or she may want to contact the Better Business Bureau (BBB) or Consumer Fraud Reporting (CFR) to find state or local agencies. These resources may help make homeowners aware of lawsuits or other disputes against construction contractors.

Using the client reference list, the homeowner may want to call a few of the references listed and ask to see the finished job. If the contractor provides the name of a client currently having work done, a homeowner may want to consider visiting the worksite to assess whether it is safe and neat and if the workers are courteous and respectful.

Get Bids

With those preliminary steps out of the way, homeowners may want to ask the contractors to prepare bids for the construction job. Responsible contractors usually require a thorough set of blueprints to guide the job and will spend time talking to the homeowner to ensure a complete understanding of what the client expects from the finished project. If the construction contractors being considered do not do design work, NARI recommends using a licensed professional architect to prepare the blueprints.

Bids should contain estimates that specify the cost of materials (typically about 40 percent), labor and profit margin (usually about 20 percent). Ezine Articles recommends asking the construction contractor to handle all necessary permits. Those contractors who ask the homeowner to do so sometimes have problems with their licenses.

When the bids come in, homeowners may want to take caution with any bid that is significantly lower than the others. This could imply that the contractor may be considering the use of substandard materials. If the bids are essentially the same, it is best to choose the contractor with whom the homeowner feels most comfortable and is best able to communicate.

Set a Payment Schedule

When determining a payment schedule, experts advise homeowners to beware of construction contractors who require half of the cost before work begins. Such contractors may either have financial problems or be concerned that clients will be dissatisfied with the work once they begin to see the results. A more acceptable schedule would be to pay about 10 percent of the cost up front, followed by three equal payments of 25 percent during the progression of the work. The client would then pay the remaining 15 percent upon total satisfaction with the completed job.

Sign a Contract

The final step is to put all details in writing, including the various steps of the project, the schedule by which payments will be handled, project start and completion dates, proof of liability and workers compensation insurance, materials and products to be used, and requirements that the construction contractor obtain lien releases from suppliers and subcontractors. This ensures that the homeowner is not liable if the construction contractor does not pay his bills. ConsumerReports.org warns that homeowners should be careful not to make any changes to the scope of work once the contract is signed and work has begun, since this often leads to time and cost overruns.

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