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From the Ground Up
Do you need a general contractor?
by Judi Heit
|
| Judi is a Sales Associate with
Mariner, Inc. Like
most, the Heits were drawn here in 1989 by their love of boating and dream of living in a
warmer climate. When corporate downsizing resulted in Judi’s job being eliminated,
they decided to "start over where they were going to end up" and headed south to
their lot on Brown Creek. The following year was spent designing and building their home,
which Judi contracted herself. This is the third in a series
of articles sharing ideas that made their building project run a little smoother. |
You’re sure you could
do it, so you may consider supervising the project yourself. However, if you haven’t
got a working knowledge about home building (or a consultant in the wings who can guide
you through the process), some people and management skills, limitless time, lots of
energy and a great deal of determination, don’t even think about it! You would have
to hire (and fire), schedule, supervise and pay framers, plumbers, electricians and
drywall tapers, to name only a few skilled subcontractors. You would have to buy (and
return) materials and time deliveries to mesh with the arrival (or non-appearance) of each
subcontractor. You would also need to know what is a fair cost estimate for the job, the
procedures and techniques for particular tasks, the local building codes and how to obtain
permits and other legal documents. You’d be responsible for building the house from start to finish … from foundation to landscaping
… for all facets of the job … with nobody to bail you out … oh, my!
Unless you’re a contractor yourself, it usually doesn’t
pay to try to become one for a single project. Also, where building a new home can be
stressful on it’s own, contracting it yourself requires marriage survival skills your
parents never dreamed of teaching you.
So, let’s assume you’re going to take some sound advice
and you’re going to hire a contractor to build your home. This is not always a
clear-cut or easy process either – if you don’t already have one in mind, you
may have to do a little research.
Finding the right contractor is like choosing a good business
partner. Both require the right ingredients to create a successful relationship: similar
views about the project, mutual trust and compatibility. Important points to consider when
you are collaborating on one of the largest investments you’ll ever make. And it
takes time to find a good one.
How do you do that? Ideally, you
should see each prospective contractor’s work before considering him. Drive around
and scout out any construction projects that are in progress. If one impresses you, find
out who the contractor is. Query people who have had a house built. Talk to lending
institutions and lumberyards. Call the REALTOR who sold you your land.
Once you’ve got your list of prospects together (start with
a minimum of four or five), call to arrange interviews (a list of questions to ask the
contractor appears at the end of this article). Find out if you can visit some of
their completed projects. They should also be willing to let you speak with previous
clients (if a contractor won’t allow this, drop him from your list). Go and look at
the completed work to check out quality and workmanship and ask specific questions (see questions
to ask past clients at the end of this article). If you’re shy or unsure about
doing this yourself, bring your architect along. Consider this additional step: contact
the local contractors’ licensing board to check that each contractor’s license
is valid. The board should also be able to tell you if there are any complaints or
judgments on file against the contractor.
You should give each prospect all he will need to make an
intelligent bid on your house: working drawings/blueprints and all modifications thereof,
specifications, a list of materials and an itemized list of elements you want in your new
home (including specific brand you may have already selected). Be sure you give each of
them identical information so bids can be evaluated on an equal basis and that you
ask for a "turn-key" price (describing any work you plan to do or subcontract
yourself).
Select the most reasonable bid and negotiate with the contractor,
questioning any costs you don’t understand. There may also be some interpersonal
issues you can clear up with him at this time: Do you have the same basic ideas about the
job? How well do you communicate with one another? Will he have a problem taking
instructions from a woman? Now is the time to determine whether you will be able to
comfortably work with this person. This is as important as any other factor in hiring the
right contractor.
Once the bids are in and you’ve selected a builder, a
contract will be drawn covering the business arrangements. Whether you use the
builder’s contract or draw one up your own, your attorney should review all
contracts (a contract checklist appears at the end of this article). NOTE:
You should know that written specifications take precedence over blueprints or working
drawings. So be thoroughly familiar with the specs (they will either be on a page attached
to the blueprints or a separate set of written instructions) and be certain that you
approve of them, as well as the final modifications of the plan, since the
specifications are legally binding.
In theory, your builder will honestly and ably produce just what
is drawn and specified. In practice, his view of the latitude or scope of the project may
be at odds with yours. His judgment calls on the details may vary from those of your
architect. This is a very sticky area and it affects many jobs, even when you’ve
carefully selected the ideal team and placed your faith in them. But take this advice
above all else: hire the architect to design and specify and the builder to construct and
manage. As the job proceeds, you should expect your architect to visit the site regularly
and apprise you of his view of progress. If he thinks the builder is shaving the specs to
his advantage, he should let you know immediately. However, do not make the architect (or
anyone else) handle quarrels over interpreting your contract with the builder. Settle all
disputes yourself, stay apprised of everything that’s going on at your job site and
have a case of beer ready on Friday afternoons!
10 Questions to ask the contractor:
- How many square feet are in the homes he’s built and what was
the price per square foot? (You’ll find a major quality difference between builders
used to working on $65-per-square-foot homes vs. those whose homes run $125 per square
foot and up.)
- If your design calls for anything unusual (i.e., complicated
stairs or complex rooflines) make sure the builder has plenty of experience with this type
of construction. You don’t want your home to be the most complicated house they've
tackled.
- Check out his financial standing. This is not an exaggerated
precaution –- contractors are accustomed to disclosing their financial history and
status. In fact, you should be wary of one that won’t.
- How many years has the contractor been in the business?
(Contractors who have weathered one or more recessions are less likely to find themselves
in financial straits.)
- Ask about fees and payment schedules.
- Does he have a problem with you visiting the job site
periodically? (You do NOT need permission to be on your own property. Neither should you
give instructions or changes to anyone but your contractor or his designee.)
- Ask if he carries worker’s compensation and general liability
insurance. Ask to see "proof of insurance" certificates. The contractor should
also guarantee that his subcontractors carry these minimum coverages.
- You have a smart contractor on the line if he insists that you
carry "builder’s risk" insurance (and you should!). This insurance protects
the property for the amount of money already advanced to a builder. For example, if your
contractor has trenched around the house and a thunderstorm floods the trench, collapsing
part of your house, the "builder’s risk" insurance pays to restore the
house to the point where the loss occurred.
- Ask what kinds of warranty the builder offers. If it’s not
one year (some builders try 60 days) ask if he’d extend it for your job. Find out
what items are covered in the warranty and ask if he will deal with an appliance
manufacturer in the event of a warranty claim.
- Ask when he could get to work if he were awarded the contract.
Good contractors book up early. You don’t want to get too far into this process or
get your heart set on someone only to find you can’t break ground for a year.
10 Questions to ask past clients:
- How many contractors did you interview before you made a final
decision? (If they didn’t interview other contractors it may mean they didn’t do
their homework.)
- What attributes made you think this he was the best person for the
job?
- Was the contractor easy to work with?
- Are you satisfied with quality of his work?
- Was the job site kept neat? (If his crew wasn’t careful on
this project, why would they be any different regarding yours? Check to see if your
homeowner association covenants includes a clause about this.)
- Did you draw up a plan and schedule, including payment terms? Did
the contractor stick to it? (Be wary of a contractor who worked without a written
agreement and demanded full payment up front.)
- Did the contractor walk you through the home at various times to
show you what had been done and to get your approval? (Reputable contractors want the
owners’ blessing at critical intervals.)
- Did you have any problems after the job was finished? Did the
contractor follow up on problems after the project was complete? Did he take care of them
promptly?
- If you dealt with a project manager, did he or she stay involved
with the project from beginning to end? Was the project manager an effective liaison
between you and the workers?
- Would you hire this contractor again
without a doubt? If not, why? (This is one of the best questions to ask because references
sometimes are reluctant to mention certain experiences. However, most people will be
honest about their answer.)
Contract Checklist
- The location of the house to be built, along with the approximate
dimensions. This should be accompanied by a legal description of the property, plus a
survey or sketch showing the siting of the house with setbacks, etc. as appropriate.
- The contractors’ license number, name and working address.
- A detailed description of the work to be performed. Dated drawings
and specifications, including modifications, should be included as an addendum to the
contract and signed by both parties to the contract. Be sure to eliminate all "or
equal" clauses that will permit the contractor to make substitutions.
- A construction schedule detailing when work is to begin and when
it is scheduled to be completed. Expect clauses allowing for weather delays and other
problems beyond the control of the builder. Some contracts have a clause that calls for a
monetary penalty against the builder if certain deadlines aren’t met; some builders
won’t sign such contracts.
- A site conditions clause. If site conditions vary from those
assumed in the contract (high water table, bedrock, etc.) then a procedure for handling
plan changes and associated expenses should be included.
- The total cost of the job with a schedule that spells out the
construction milestones and payment amounts for completing each phase. The final payment
is usually withheld until final approval of all work by the owner and the receipt of a
certificate of occupancy from the local building inspector.
- A statement indicating who is responsible for obtaining and paying
for all permits, licenses and other fees along with sales or use taxes. This task is
commonly the responsibility of the general contractor rather than the client.
- Procedures for change orders and a clause stating that all changes
must be in writing. Each such order should specify the work to be done, the cost and the
effect on the completion schedule. The responsibility for changes due to the
builder’s error and any resulting costs should be outlined. If there is a
disagreement on this issue, procedures for resolving disputes should be agreed to that
won’t interrupt the progress of the job. There is also usually a clause absolving the
builder of responsibility for flaws in the design, plans or specifications that
weren’t supplied by his company.
- A mention of any agent who will act for you (such as your
architect) as well as the role and liability this person will assume.
- Site improvements, such as clearing, grading and drainage, and who
will make them.
- Who pays taxes, utility bills and the like during construction?
- Who owns the plans and specifications?
- Warranties. Warranty documents walk-through procedures and the
service policy should be attached to the contract. It should be clearly stated who is
responsible for what. Though manufacturers’ warranties will cover many items in a new
home, the protection often does not extend to their installation.
- Arbitration or mediation procedures to settle disputes. All
complaint notification procedures and time limits should be detailed.
- The conditions under which the contract can be terminated and the
costs to the owner. Bankruptcy issues should also be addressed.
- Details of liability and insurance issues. Who pays for the
builder’s risk insurance, for example? The builder should provide for your inspection
certificates of insurance for builder’s risk, worker’s compensation and any
other insurance forms customary in your locality.
- A "waiver of lien" provision, specifying that the
contractor provide you with lien releases from subcontractors and suppliers as the work is
completed. (At the same time, secure an "affidavit of release of lien" from your
contractor as well.)
- Details and schedules for any work or subcontracting you plan to
do yourself.
- All parties must sign and date.
To Judi Heit's first
article in the series
To Judi Heit's second article in
the series
To Judi Heit's third article in the series
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