How to Find and Select a General Contractor

Transcription

1 How to Find and Select a General Contractor Introduction Now that you have decided to build your own garage, you need to determine whether you want to take on the project yourself or hire someone to do it for you. If you decide to act as your own General Contractor, you then need to decide if you want to hire subcontractors to do all or some of the work. We will cover hiring subcontractors in another How To Article; for this article we are going to stick to the hiring of a General Contractor (GC) to manage your garage building project. Finding a good General Contractor for your garage project is one of the most important parts of the construction process, and making sure you have the right one can save you time and many headaches. A GC will come equipped not only with construction expertise, but with the ability to manage any subcontractors, order materials, and make sure that the construction process goes smoothly. Develop a List Where to start? As with most everything we do, it s wise to seek the counsel of others. Do you have any friends or acquaintances that have used a General Contractor recently? Word of Mouth endorsements from someone you trust can go a long way to helping you make it through this project without too many hassles. If you can t find any personal references you will have to go looking elsewhere. There are a number of sources you can use to start your search. If you have access to the internet don t waste your time with other sources, go online first thing. We recommend finding your local Better Business Bureau website by doing a search on Better Business Bureau Florida, substituting your state for Florida of course, unless you happen to live in Florida. You can also go to if you live in the U.S. or Canada, and they have a search tool to find your local BBB website right on their home page. Once you get to your local BBB website look for a link something like Find a BBB Accredited Business on the home page. We checked a few BBB sites and they were somewhat inconsistent in their handling of the search function as of the writing of this article. Some had the link and some didn t. Without the link to find an accredited business, you will have to actually enter the name of the business to find their ratings on the BBB site. Kind of defeats the purpose of using the BBB to help you find a business, but that s just the way it is. But don t despair; there are other ways to find a reputable GC.

2 A Google search for General Contractor with geographic qualifiers will turn up a plethora of possibilities; this is what we got when we searched on general contractor bethesda md : From here you can then start picking out a few likely candidates to check out through your regional BBB. Very important! The order that they appear in the search engine rankings in no way depicts the quality, reputation or size of the GC. Just because a contractor is listed first doesn t mean they are the best, it just means they got listed first. You still need to do your due diligence. Look for testimonials on the General Contractor s website from satisfied customers as one clue to their performance. See if they have pictures online of some of their work. Look for other clues like how long they have been in business and what industry affiliations they have. Narrow down your search to 3 or 4 likely candidates before moving on in the selection process. If you haven t already done it, go back to the BBB website and do a search on the contractor s name to see their ratings or if there are unresolved complaints. As a last measure, do a search on the General Contractor s name to see if anyone has commented on their performance in a blog or other commentary site. Obviously we like the Better Business Bureau and think they perform a wonderful service, but there are plenty of reputable General Contractors out there that aren t rated by the BBB. If all else fails, you can break out the yellow pages, assuming you still have one and you can find it. Look under the heading General Contractors or Contractors, General. Remember that the quality of the contractor is not measured by the size of their yellow pages ad. Call your BBB to see if they have any unresolved complaints on each GC you are interested in.

3 License State and local governments can have a myriad of rules and regulations covering the licensing of contractors. The first thing you should check before hiring anyone to be your General Contractor is whether they are properly licensed for your area. The site is a good source of information to determine the licensing requirements for your state. Your local city and county licensing requirements may differ, so you will have to check with the appropriate government authorities, but many of them will just follow the lead of the state. Insurance There are several types of insurance you want to make sure your General Contractor carries. They should carry liability and property damage insurance, plus worker s compensation insurance. Since the work is being done on your property, you could be held responsible should one of the GC s workers get injured there. If the General Contractor has liability and worker s comp that should be enough to keep you out of trouble. Some contractors will also be bonded, meaning they have an amount of money set aside with a third party to cover any claims they are held liable for. Check with your own homeowner s insurance agent to find out what your insurance covers also. Contact the Candidates Once you have the list whittled down, call each of the GC s and explain to them briefly what your project is and ask them to meet with you. Ask them to bring a copy of their license(s) and insurance coverage documents (that you can keep) to the meeting. At your first meeting, share with the contractor your plans and your ideas. Show them your garage plans if you have already purchased them, otherwise you will have to ask the GC how many copies of the garage plans they will need for themselves plus subcontractors. Their attitude at the first meeting should tell you a lot about how well they would work with you. Ask them to share with you any experience they have working on similar projects. Find out what portion of the work the General Contractor plans on doing, and what part they need to subcontract out. It s generally a good idea for the GC to do as much of the work as possible to reduce the possibility of miscommunication with subcontractors. They will probably have to sub out any of the specialty items like plumbing and electrical, but try to keep that to a minimum to contain costs and control of the project. In most cases, the General Contractor should hire the subcontractors and should ultimately be responsible for all work done by the subcontractors. Here is a list of questions for you to ask and other things to confirm at your meeting with the General Contractor candidates: How many years of experience do they have in construction? Since the majority of your garage project will involve carpentry, you should know what the GC s primary area of expertise is. Preferably it is in carpentry. Ask for references from o Jobs they have completed within the past year

4 o o o Jobs they are currently working on this one is important. They may have operated very smoothly in the past, so this is going to give you an idea of how their business is currently functioning Subcontractors they have worked with. Contact the subs separately and ask them if they feel they were treated fairly and if their employees felt safe working under the GC Suppliers they use Review the license(s) - Some states require GC s and subcontractors to be licensed. Ask for a copy of the license(s) for your records and be sure to check the expiration date. If you have any doubt about the validity of the license, contact the government licensing authority Review the general liability insurance policy - This protects your property in case it is damaged by the GC or their employees. Make sure they carry the insurance, and be sure to get a copy of the certificate Review the workers compensation insurance policy - This protects you from liability in case a worker is injured while on your property. If the GC does not carry it, then be aware that you may be liable for any injuries sustained by the GC or any of their employees on your property. Ask for a copy of the certificate Review the surety bond (if they have one) - This can protect you from loss in the event you have a dispute with the General Contractor Do you belong to NARI or NAHB? These are both reputable professional organizations that attract contractors who are interested in bettering the industry. To become a member, their background and references are thoroughly checked. NARI National Association of the Remodeling Industry, NAHB National Association of Home Builders Will the General Contractor obtain all required building permits? This is important! Sometimes, a contractor will not pull the appropriate permits because of the extra time and hassle associated with inspectors. However, permits will ensure that all construction is done to the local codes. If the GC asks you to obtain the codes or the permits, this could be a red flag that they are either unlicensed or that the scope of the project is outside of their license. Always be sure and obtain the appropriate permits!! How long do you guarantee your work? Most contractors will guarantee their work for 1 year from completion of the project. Be sure to ask for information regarding any warranties associated with products or materials they used on your project. Get it in writing! Will the General Contractor provide you with notarized Lien Waivers for themselves, all subcontractors and all suppliers? If there is a significant amount of money being exchanged at times during the project, you can get lien waivers for partial payments on the work done or the material bought at that time. Make sure you tell the GC that you will want the Lien Waivers notarized. Make sure the GC knows you plan on creating a Contract for the work, and make sure they will sign it. Verbal agreements don t work. Don t agree to a verbal contract no matter how much you trust the GC. Will they require money up front? It s not unusual that the contractor might ask for some money up front to pay for material. Make sure you know how much they want so you know how

5 it fits with your plans. If it sounds like an unreasonable amount, this could be another red flag. How many other projects are they working on? There is a fine balance between having so much work that they won t be responsive to your project, and having so little work it makes you suspicious why they don t have more work. Who will be your point of contact during the project? These are just a few good questions to ask before you make a decision on a GC. Be honest with them and let them know you are interviewing others for the project also. No matter whom you end up choosing as your GC, be sure to have a detailed, signed contract that clearly defines the scope of work, project schedule, material/product specifications, costs and payment arrangements, etc. You will have very little legal recourse if something goes wrong and you don t have a signed contract (signed by you AND the GC). For more ideas on what to ask, just type in questions to ask a general contractor into your search engine and you will come up with thousands of results. It pays to do your homework. Proposal Time By this time you probably have a pretty good feeling on the capabilities and experience of your General Contracting candidates. Three to four candidates is probably a pretty good number to proceed to the next step with. Now you need to get an estimate from each of them to see what they will charge you to do the work. To make sure you get a consistent response, you should use a document called a Request For Proposal, or RFP. The RFP spells out exactly what your project entails so that each of the General Contractor candidates is bidding to the same scope of work. There are generally two different approaches you can take to the proposal and ultimately the contract: Fixed Price Proposal/Contract Cost Plus Proposal/Contract A Fixed Price contract means that you and the GC agree upfront on the price of the work. No matter what happens during the course of the work (with a few exceptions), the General Contractor must cover the cost based on what you agreed to upfront. This type of contract protects you from things like increases in lumber cost and is generally the less risky of the two types of contracts. There is a cost associated with a fixed price contract. The General Contractor will normally increase their profit margin to cover unexpected expenses, so this type of contract is somewhat more expensive. A Cost Plus contract means that you agree to pay for all the expenses, or costs, of the material and the labor plus an amount over the costs to the General Contractor. You assume the risk of any price increases during the course of the project. Since the GC has little risk, you can probably get this type of contract a little cheaper upfront, but in the long run it could end up more expensive if the prices of material or labor increase. Conversely, you could make out like a bandit if the prices of commodities start falling. Most people sleep a little better at night with a Fixed Price contract. You can find RFP forms online or they are available in the TRC Legal Kit. To get the most accurate response to your RFP s you should include a copy of your garage plans with the RFP.

6 Decision Time Within a few weeks you will have the proposals from your General Contractor candidates in hand. Don t be too shocked if the prices vary dramatically from one proposal to the next. By having a few proposals, you can probably weed out any outliers with a high level of confidence. If one of them varies extremely from the others, you can probably discard it. You may still have questions for the GC s based on their proposals. ASK! If you think the response to the question might have some bearing on the outcome of the project get the answer in writing and make sure it is stated clearly in the contract. If you run into the problem that all of the proposals are out of your budget range, you have some work to do. Talk to your GC candidates and tell them your situation. Ask them if they have any ideas about how you can reduce the scope of your project to save some cash. If they offered some valid ideas, rewrite your RFP with the reduced scope and send it out again. You could also consider picking a different garage plan that is not as costly to build. That s a pretty drastic measure, but it might be your only alternative. If you really have your heart set on your original plans, you might have to consider alternative financing options. Once you finally have several proposals you can live with, narrow it down to two candidates and from there you can do a few different things. If the GC you liked the best from the interview process has the lower priced proposal, you should probably go ahead and use that contractor. If they are priced about the same, pick the GC you feel most comfortable with. If the favored GC is higher priced, you can try calling them and asking if there are any things you can change in the proposal to reduce the cost. Give them a target reduction amount. It is probably a better approach to ask them to reduce scope rather than to just lower their price. If they have been in business for a while, they already know what margin they need to work with and they have probably factored that into the price. A little bit of negotiating is OK, but don t game your GC candidates against each other or you ll end up with none of them willing to take on your project.