How to Choose a Contractor
February 24, 2009
Contractors come in every stripe and color. But from custom homebuilders to fencing companies, one thing that marks reputable contracting companies is that they stand behind their work. Maintaining the solid reputation they’ve worked so hard to build is important to them, so if you have a legitimate problem with the work they’ve performed, they want to make it right.
Another benefit of working with a reputable contractor is that they are likely to do the work right the first time, thereby eliminating the need for a warranty repair call to cure a construction defect.
So why would homeowners choose to work with anyone other than a reputable contractor? The answer is they don’t choose to. They are assuming the contractor they’ve chosen is reliable. But if they haven’t done their homework properly, they might not realize their mistake until after the problems start to surface.
To avoid finding yourself in a similar situation, use these guidelines for choosing a contractor.
Verify Contractor License Information
Because the construction industry is so attractive to unscrupulous operators, every state licenses its contractors. Those who violate contracting laws have their licenses revoked and face severe penalties and possible jail time for operating without a license.
To verify your prospective contractor has a valid license, check with the licensing authority in your state. Most have contractor licensing information available on the Internet, making it easy to verify. What you should check is:
- The license is current.
- The name and address on the license is what you expect.
- There are no adverse actions reported.
- All other information is favorable or as you expect
.
Verify Liability Insurance and Workers’ Compensation Insurance
Many (but not all) states require contractors carry commercial liability or general liability insurance. The required limits of coverage vary. Even if your state does not require contractors to have liability insurance, you are placing your home at risk if you hire an uninsured contractor.
Additionally, every state requires contractors to carry Workers’ Compensation Insurance. In some states, Workers’ Comp may not be required if the contractor pledges that he does not and will not hire employees. However, if the contractor does not have this coverage and a worker is injured, and later it’s determined the worker is a statutory employee of the contractor, you can be liable for the costs of the injury.
Obtain from your prospective contractor the name and phone number of his insurance carrier. Call the carrier to verify the contractor has both types of coverage and that it is currently in force (not expired).
Verify References
Obtain the name and phone number of at least three of the contractor’s recent customers. If possible, you want customers whose jobs were similar to what you’re contemplating. Actually call and talk to the references. Questions you might ask include:
- Did the contractor start and finish the project on schedule?
- Was the final cost what the customer expected?
- How did the contractor handle change orders?
- Did the contractor or his supervisor stay in daily contact regarding job progress?
- What surprises were there?
- How would you grade the quality of the job?
- Does the customer recommend the contractor for your type of job?
- Have any issues come up after the job was completed? If so, how were they handled?
Review the Contract Form
Contractors all have a standard contract form they use. Now is a good time to review the boiler plate language to see if the terms are fair or slanted toward the contractor. Trying to decipher the legalese at the time of contract signing is almost always impossible, so doing it ahead of time is best.
Ask About Change Orders
During the course of the project, you may discover something additional you want, or want done differently. The contractor may also encounter unexpected conditions not included in the contract requiring extra work. Such changes in the project as it’s in progress are referred to as change orders. Ask the contractor how change orders are handled and if you can you see a sample of a written change-order form.
Also find out how change orders are priced.
Examine the Bid
If you are also reviewing competing bids from other contractors, be sure you can determine what is included and not included in the work. What about the cost of plans or permits? What about finish items such as floor coverings, painting, lighting fixtures? Are the grade and quality spelled out?
Some bids may contain “allowances.” This represents the money the contractor is setting aside for a specific part of the project – carpeting, for example. If the carpeting allowance is $4,000 and you choose carpeting that costs $4,500 installed, then you owe the contractor $500. If you chose carpeting for $3,500 instead, then he owes you $500.
Beware of contractors who “lowball” the allowances. By designating some materials as allowances and allotting less money for them than is realistic , a contractor can appear to underbid his competition, but you end up being stuck for paying the real cost in the end anyway. Be sure allowances are realistic.
How Did the Candidates Do?
Hopefully during this process you did not encounter any of the warning signs that you might be dealing with a shady contractor. If you did find a reason to disqualify one of your candidates, then congratulations. You dodged a potential bullet.
If all your candidates came through in good shape, then congratulations still. You will probably fare well with whomever you choose. If the references, bids and proposals are all roughly the same, it may come down to whom you feel better working with. After putting your prospective contractors through these hoops, you will probably have gained insights into their demeanors and temperaments that will be very valuable in making your selection.
Related Articles
- Questions to Ask Your Contractor Before You Sign
- Shady Contractors: Warning Signs to Watch For
- What Does Contractor Liability Insurance Cover?
- Should You Ask for a Performance Bond?
Got something to say?