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About Hiring a Contractor or Builder
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Undertaking a big repair or renovation can be intimidating, especially the thought of selecting the top person in charge, the commander-in-chief—the contractor. Vital to any major household work is an excellent contractor, a professional who, like a general, takes in the big picture as well as the details, is seasoned through experience, knows his troops and the system, gets the job done well and on time and wins your admiration in the process.
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The General Contractor’s Job Description
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| The terms general contractor (GC) and job contractor are used interchangeably to describe the same professional. The GC’s duties are to execute the contracts, secure the permits, supervise the trades, manage the budget, make the schedule, deliver the quality and call it a day. Design/build contracting firms will also draw up your plans and specifications (i.e., the contract documents), eliminating the need for an architect. |
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What to Look for in a Contractor
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Picking the right general contractor is all about communication. A homeowner needs to know as much about the GC’s capabilities as the GC needs to know about a homeowner’s expectations. With stakes this high—mortgages, reputations, living another day at your in-laws—it’s time for everyone to feel completely secure in the leadership on the job. You should feel comfortable stating your wishes to the contractor and have confidence in his ability to listen, explain, cooperate and delegate.
Make sure your contract documents (or ideas if it’s a design/build) are clear and thorough. Your GC candidate should be experienced in jobs of a similar type: restoration, renovation or new construction. The GC should be well versed on the architectural features, building applications, specialty installations, customization and level of quality you expect. Also consider the scale of the GC’s past jobs, including cost and total square footage. You don’t want to be the job stuck below the radar screen of a commercial-minded contractor, or hook your wagon to a little guy who can’t muster the horsepower.
You want the GC to be fluent in the code requirements of your locale. The city permitting and inspection processes are notorious instruments of delay. Also, nail down your GC’s availability. If he can’t commit to a target start date, you cannot depend on his ability to stick to a completion date, and chances are you’ll be living in a construction battle-zone for an indefinite time.
Finally, you wouldn’t let a stranger in your door, so before you invite in a platoon of workers brandishing power tools and sack lunches, get references. Any GC in The Franklin Report is reputable, but talk to clients and inspect jobs in progress yourself to get a feel for a GC’s abilities and current slate of jobs. Also talk to those clients with jobs completed to get a reading on how a GC maintains his word and work. Investigate for any lurking lawsuits at the Better Business Bureau and confirm licensing with the Consumer Affairs Department, (212) 487-4444. More than 30 states now require licensing or registration for GCs. In New York City, a GC shouldn’t be able to get a permit without one.
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On Cost
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Typically, three bids should suffice for a clear and fair comparison of estimates of project cost. In these flush times, this may mean approaching twice that number just to get a telephone call returned. Cost is a reflection of material and labor (as provided directly or through subcontractors), bonding and insurance, the general conditions (overhead to keep the job running) and the fee. General conditions and the fee are calculated as percentages of the total hard-construction costs, roundly at 10 and 10, or 20 percent, though GCs vary somewhat. Bonding offers insurance against a GC’s failure to perform or pay subcontractors. It’s a protection against negligence and liens—claims of debt that can be attached to the title of your property which cannot be sold until all liens are settled. Insurance covers full liability and workman’s compensation. Any and all associated permit fees (calculated archaically by the city as a percentage of total job cost), deposits or taxes also figure into the cost.
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Tips on Choosing a Bid
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Jumping on the low bid may be tempting, but don’t take the bait. Factor other values into the equation, such as personality and experience. If a bid is enticingly low, it almost assuredly signals that the GC doesn’t fully grasp the scope or has value-engineered (cut-corners) without your consent.
A good GC doesn’t lowball, he negotiates. Don’t be shy about demanding a thorough cost breakdown. If the GC’s numbers come from subcontractors, get the subs’ bid sheets. The more subcontractors are employed, the more overhead and fee mark-ups will inflate the bottom line. Some GC’s employ a stable of the same subcontractors. These prices tend to be higher due to lack of competition. While loyalty speaks for quality, it’s always your prerogative to ask the GC for an alternative sub. Just don’t be surprised if he refuses.
You can always shave a few dollars off the bid by entertaining the possibility of service contracts. These are typically maintenance agreements that plug the gaps in the basic warranties. Many subs will try to snare you into buying one at the end of the job, but beat them to the punch and inquire about them at the outset. Use the prospect of your entering into a service contract later as a tool to negotiate for a reduction in the cost of a bid. It offers contractors the incentive to forego dollars today for the chance of a service contract deal in the future. The homeowner benefits by using the service contract issue as a bargaining chip in the bid process.
With mortgage agreements mandating higher interest charges during construction, penalties charged for not making move-in deadlines and the cost of renting space elsewhere, you might find a bust schedule more painful than a bust budget. Use incentives to motivate the GC to keep costs low and to make schedule. Bonuses go over much better than “damages clauses” that threaten penalties for blowing a deadline. Most GCs won’t go for them, and anyway, they’re incredibly treacherous to enforce.
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Get It in Writing
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About the only thing that doesn’t need to be detailed in your contract documents are the middle names of the contractor’s children. Every detail should be recorded on paper. The plans and specs furnished by your designer provide the fundamental outline of the job. This means noting every raw material and product—including brand, model number, color and installation method. Be meticulous. If it’s not on the drawings, it’s not going to show up in your home, unless of course you’re willing to sign the change order.
The change order, you ask? If you make a request that deviates from project’s scope as defined by the contract documents, expect to pay. Some changes may be inevitable, if you are unfortunate enough not to have x-ray vision or if you fall prey to your own whimsical inclinations halfway through the job. But be sure that any charges passed under your nose weren’t already in the original contract. Ask your architect to investigate each submission to make sure everything’s on the level.
Spell out in the contract how change orders will be handled. A smart idea is to fix the unit costs for labor and material that were established with the original contract so there are no surprises about price of extras. Also, a GC’s obligation to meet code does not shield you from a city’s permitting and inspection schizophrenia. Your contract documents must refer to the applicable codes. Because many are open to interpretation, and because problems might be overlooked on a hasty inspection, a city official on a bad day can be a major source of change orders. The rub: if it’s not on the drawings, the GC will not claim responsibility. Remember, however, that the GC should be absolutely responsible for obtaining the necessary permits for the job. This includes filing your plans and specs with the city for review and approval.
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Decide Upon a Payment Schedule
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If your partnership with a GC is a waltz, and contract documents the choreography, then payment provides the music. Your contract should specify the schedule of payment. Nothing will undermine a job more than misunderstandings about money. If payment is expected on a certain date, don’t expect workers to show up if you miss it. Commit to what you can do. The most desirable arrangement is progressive payment on a phase-completion basis. Use benchmarks, like pouring the foundation or rocking up the walls, to close the end of a phase. Agree on the amount of each payment beforehand. It’s a great incentive to push the GC through each phase.
Monthly payments are an alternative, but this setup commands more attention to accounting and is less of an incentive. A request for bi-weekly payments does not bode well—it may indicate that the GC doesn’t have the capital to run the job properly. In any case, if you don’t want to be dropped, keep the music going. Be sure to hold on to retention—10 percent of the money owed on the job—until all punch list items have been completed and all warranties, manuals, etc. have been handed over.
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Tie Up Loose Ends
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Punch list items are loose ends such as missing fixtures, polishing finishes and fine-tuning systems. Left hanging, the punch list and warranties are things that will keep your GC in your life much longer than either of you care for. Spell out the procedure and schedule for generating, attacking and revisiting punch list issues. A good GC doesn’t need to be hand-held through the process, but it should be clear from the outset who’s doing what. And give him a break if not everything is perfect at first. Be patient. Most of the warranties passed on by the GC are from the subs and manufacturers. The GC will offer an umbrella warranty. Ideally you want to have one contact person if things go wrong. Warranties can range from one year on parts and labor for equipment to ten years on workmanship items. No warranty should kick in until the day the certificate of occupation or completion is issued by the city.
All this can be wrapped up in a tidy little standard AIA (American Institute of Architects) contract with the usual qualifications attached: plans and specs, the GC’s bid proposal, terms and conditions, co-op regulations and anything else you want to include.
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Additional Considerations in Choosing a General Contractor
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| Don’t settle for anything less than a principal of a contracting firm who expresses interest in the status of your job both at the outset and throughout. The tone is set from the top. If not the principal (who may be as active in that particular shop as the Queen Mum is in running Britain), then you should get an audience with the prime mover and decision maker just to put a pulse and a face to the job. Personality plays a big part. You should not only feel like you can trust your GC with the keys to your house, but enjoy having him around. Goodness knows he’ll be spending enough time there. Once the job begins, he will also dispatch an on-site supervisor and a project manager. They will be the ones coordinating with your architect. Weekly site meetings are a must. As with picking the right GC, running a smooth and successful job is all about communication. |
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Tips for a Painless Job
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- Make contract documents as detailed, clear and complete as possible.
- Establish good chemistry and communciation between yourself, the GC and the architect.
- Have GC hold weekly site meetings with subcontractors.
- Make payments on schedule.
- Trust the contractor and keep a sense of humor.
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