Contractor Grade

Contractor Grade

Choosing the building contractor who is right for you

Choosing the contractor who's right for you.

Choosing a contractor to build your home is vital stride in making your dream home a reality.  There are a lot of factors to consider when making your choice and a few missteps that can be avoided with a little research.

Step #1:  Knowing what your contractor will do for you.

When construction commences your contractor will manage, arrange and handle all aspects of the process.  Working off your floor plans they first provide you with pricing, obtained from their various trades, and then acquire any permits & engineering documents necessary for construction in your local area.  They arrange for materials to be delivered to your site and manage all the various trades’ people (excavation, carpenters, electricians, plumbers, drywall installers, etc.) that will work on your home so that they arrive when needed and conclude their jobs proficiently and according to the schedule needed to meet the possession date you have set.  Quite the responsibility when you think about it, but many contractors can manage a large number of projects along with yours and never see a single hiccup in the process.

Step #2: Finding the Contractor who is right for you.

While these days you certainly CAN find a contractor on the web or in your phone book, a better place to start is often with friends, family or neighbors; their personal experiences with contractors can be invaluable in the selection process.  Did the contractor they used live up to his promises and deliver what was agreed to?  Were there problems with the construction and how they were resolved?  Most importantly was the contractor honest with them about his schedule and his costs?  Often you can find just the right person simply by asking around.

If you don’t have that personal reference then checking with your provincial or local home builders’ associations is often a good place to start.  These associations register builders and hold them to a code of conduct, while ensuring that they have available to them resources such as training for building code changes and information on new products and their applications.

Your local chamber of commerce or better business bureau can often point you in the direction of builders with a good reputation in their community.  Builders who are registered with the Chamber are monitored and problems with them can go onto a permanent report, so they are often very careful and willing to work with  you should a problem arise.

If you have the chance, go to your local home show prior to making your selection.  Often builders will be present with displays of some of their previous projects.  You can research building materials while also getting an opportunity to meet with several contractors all in the same place.

Step #3: Narrowing down the list

Whether the search has brought you one or twelve contractors with good references you still need to meet with them and ensure that this will be the right fit for you.  You’re going to want to interview whomever you have short listed and see if they are up to standard to manage your project.  We suggest having a series of questions listed to ask each contractor so you can evaluate their responses on similar issues.

How long have they been in business and what experiences do they have that will apply to your project?

Will they perform the work within their company or will they subcontract the project?

What kinds of insurance will they carry on your project?  This issue is often something you should familiarize yourself with in advance.  Your mortgage lender will most likely have requirements for what types and amounts of insurance will be required and your builder will be required to provide proof of insurance before the mortgage lender will issue funds.

Can they provide you with a sample of the contract documents you will be signing?

If you already own a property what suggestions do they have about the land and what issues can they foresee with regards to construction?  Issues arising from soil and lot grading can single-handedly drive your project over budget if not properly accounted for in advance.  Does the contractor feel that any additional engineering will be required due to soil conditions or grading?

What makes this contractor unique compared with his competition?  Does he build in an energy efficient manner?  Can you see an example of the quality of the finish inside one of his previous projects?  These sorts of questions will tell you whether this builder is competent enough to handle the responsibility you are going to hand him.

This is also an opportunity for you to get a feel for what the relationship will be like between you and your builder, after all this business is about building more than houses.  You need to feel comfortable interacting with your builder as you will likely be seeing a lot of them in the coming months.  If you have a property already then you should take each contractor out to the site and walk it with them.  Discuss the design and how it should situate on the lot.

Be sure to interview and receive bids from at least three contractors.  You’ll never know what you might have missed if you don’t shop around.

Most importantly of all, make sure you are clear about everything that the contractor tells you.  Miscommunication is the most common way for errors to take place in the construction process so make sure from the beginning that the contractors clarifies anything you have ANY trouble understanding.   That’s their job.  You need to understand what you’ll be purchasing from them, when you need to have made decisions about the house, and what is going to be charged to you right off the bat.

…and when all of your interviewing is done you need to make your final decision.  Bear in mind these three summary points when making your final choice.

1. Did I feel comfortable that they were competent?
2. Did I feel confident that they were trustworthy?
3. Did I feel confident that they understood what I need?

Unless the answers to all of those points are yes you should really consider shopping around some more.

Step #4: Write it all out

Contracts are invaluable in the construction business.  Written, clear and concise, these documents can save any project from a thousand, million different pit falls that can arise through the course of a project.  Certainly if you feel comfortable with a contractor the verbal agreement he/she proposes might seem like a reasonable agreement.  However, the construction of a home takes months of time to complete and who is to say that what appears to be a good relationship at this point will be the same at the end of that process.  Therefore a contract is always a prudent way to

A contract will outline what the responsibilities of the contractor will be.  It defines all of their involvement and their responsibilities and also outlines what you, the client, will be responsible for.  It defines the cost of the project, including the builder’s fees and all taxes and should show a schedule of when funds will need to be passed over to the contractor from you, and the method you will pay in.  There will likely be clauses outlining what the materials of construction will be and how they will be disposed of and at whose cost.  Also there will be a section outlining schedules and what your possession date will be scheduled to be.  Some contracts will ask for penalties and bonus scenarios depending on if the contractor is early or late for the possession date.

The likelihood is that your contractor will have developed a standard contract form and amendments can be made to that to incorporate any special requirements and terms that you agree on in negotiation.  You will need to involve a lawyer to review the contract and you will need to read the contract carefully before signing.  You and your contractor should both sign the contract and you should both have a copy.

As mentioned if your project is likely to take a period of months to complete then the contract will include the payment schedule for when you will to submit funds.  These installments or “Draws” will be based on the completion of stages of the construction.  It is always wise to have a walk through the property and inspect the process of construction prior to each installment being issued and contractors will often schedule these walkthroughs as a part of their process.  If you see things which are deficient during the course of the walk through you will have the chance to see them corrected before the next draw is passed on.  However, the full value of the contract is not paid out immediately on completion of construction.  For most projects 10% of the total value fo the contract should be held back until 45 days after completion to protect you against unpaid bills on the part of the contractor.  This hold back process is a legal requirement in many areas and the contractor has no right to pressure you to pay out this final amount before it is due.

Contractors who have not received compensation have the option to place a lien on your property to ensure that they receive the payment that they are due.  Should this occur, and if you have already paid out the full amount to the contractor, you would be responsible for the outstanding balance legally, so it is always a good idea to make certain that you are safe to proceed before making your final payment.  You should consult your local authority to see what the period is after a trade completes their work before they can no longer place a lien and act according to that timeline.  Also, as you may not receive notice that a lien has been filed right away you should check with the title registry office in your area to make certain that no liens are on your title before you pay out the hold back amount.

Alterations can be made to the contract through the process of construction; these are often called addendums or amendments.  These will give you the freedom to change your mind about certain details of the construction.  Often these addendums will require an additional fee depending on the stage of construction and what work will be required to make the change, but it means that you have the option to make changes if you should wish to.

About the Author

Joel Stewart is a Canadian Home Designer who manages The Stewart Design Group based in Kelowna BC. He has worked designing homes since 1999 for areas all across Canada.
Joel manages the website SdgHousePlans.com.

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