Contractor selection is a critical factor in the success of any construction project.

Allow yourself the time to get to know each contractor. Both of you need to explore the problems, products, and prices. You will be surprised at how many options and questions can be discussed with a professional contractor.

Taking the time qualifying the contractor prior to awarding your project can save endless hours of dealing with dissatisfaction. A professional contractor will take pride in his work and will have no problem discussing your options, his previous experience, and his list of satisfied customers.

Ask these questions:

What is the full name and address of the company?

All contractor selection guidelines start with this question because most problems involve low-bid undercapitalized contractors.

Automatically reject any contractor without a permanent place of business.

If the contractor is not permanently established, how can you be confident he will complete the work? How can you be confident he will be in business if the work needs service in the future? What do you do if the project fails and you are financially harmed or the contractor is not financially responsible?

The courts are full of dissatisfied Owners with worthless judgments against insolvent contractors.

While there is no way to guarantee any business is financially stable, there are some steps you can take to protect yourself.

Visit the place of business. Does it look established? Does it appear to have the equipment, manpower, and wherewithal to complete your project in a professional and timely manner?

Automatically reject any bid from a contractor without substance.

Do not be swayed by personality or attractive low price. It is not worth the risk. Select only a company that is financially committed to the business. Select someone you can call if a problem arises in the future.

A professional contractor will have no problem giving you a tour of the facilities and provide whatever financial proof is required for your peace of mind. Don't be timid about asking.

Does the company carry insurance, and is the coverage adequate?

This is the second most important question. Owners have been financially harmed by uninsured or inadequately insured contractors.

Automatically reject any contractor without proper and adequate insurance.

You should receive a Certificate of Insurance for Comprehensive Liability, Worker's Compensation, and Completed Operations Insurance to protect you in the event of an accident and provide financial coverage for a failed project. The insurance should be adequate to cover the property.

Call the insurance company and verify coverage. Insurance policies are for one year and unscrupulous contractors have been known to modify the dates.

Worker Accidents: Be aware that Owners are sued for injuries on their property. Most Owner Insurance Policies exclude outside contractors, so it is critical to make sure there is proper and adequate coverage. Don't be fooled by the contractor who says he doesn't need insurance because he is self-employed.

Today, insurance to protect the workers and your property is a significant cost of a construction project.

The contractor saves money by operating without insurance, but puts you at great risk. The contractor working without insurance generally has no assets and nothing to lose, so you as the Owner are totally exposed to any losses.

A professional contractor will readily provide you with a Certificate of Insurance and phone numbers you can call for verification.

Job Site Safety: Safety violations are now causing projects to be shut down and penalties are levied against involved parties. Some Owners have been stuck with incomplete projects due to violations and the
contractor's unwillingness to pay fines or return to the site. In some cases Owners have been classified as employers by OSHA, and have been found responsible for the fines.

Ask contractors about their Safety Plan, which is required by OSHA. Professional contractors will readily provide you with a Safety Plan so you are protected.

Is the company a licensed contractor? Is the contractor a member of a trade association and in good standing?

Automatically reject any contractor who is not licensed. However, a license alone is not sufficient because often the license requirements are minimal. A better test is to test the contractor's commitment to his trade. Is he a member of the trade association?

Call the association and verify the answer. Ask if the contractor is taking Continuing Education Training, similar to other up-to-date professionals. Ask to see certificates.

A professional contractor will be only to happy to respond to these questions.

How long has the company been in business?

Needless to say, the more experienced the better. Under five years is often a tell-tale sign of an unstable business. Most contracting businesses (90%) fail within the first five years.

Check references carefully. A professional contractor will gladly provide references and want you to speak with his past customers.

What is the contractor's track record for handling complaints?

Be wary of any contractor who says they have never had a complaint. Even the best encounter problems sometime.

Ask for the name of a problem account and explanation as to how it was resolved.

What is the company's workmanship warranty?

Typically, workmanship warranties are for one year or more. Longer warranties are not necessarily more valuable. The length of the warranty is less important than the intent and ability of the contractor to stand behind the work. Established contractors often perform beyond the written warranty period to build customer loyalty and referrals.

Be ware of any contractor promising an unbelievable warranty: this is just a sales tool. Long term and "lifetime" warranties fall into two categories: those issued by viable companies, but written so that you are unlikely to collect, and those offered by companies with no resources or intention to perform.

Recognize that contracting is a highly competitive business with thin margins. Businesses that offer unrealistic or "too good to be true" promises are not around to honor them.

Specific questions for specific projects.

Compliance with local ordinances - Ask what is required. Contact the local building department for verification. Find out if the cost of the permit is included.

Product Selection - Make sure the proposal includes a specific reference to the product and color you have chosen.

Manufacturer Warranty Specifications - If the project is to be warranted by a manufacturer, confirm that the agreement states that the work will conform to the manufacturer specifications.

Clean-Up - Call for daily clean-up to help minimize safety issues or exposure.

Payment Terms - Terms and method of payment should be clearly detailed in the agreement. Establish an agreement regarding retainage if a certain portion of work is left incomplete or there is a "punch list".

Preliminary Inspection - Plan to meet with the Job Foreman to make sure he fully understands the specifications and promises made by the company. Establish the condition of the property before the work starts in the event there is property damage during construction.

Understanding the Contractor

Just as you are qualifying contractor, contractors are qualifying you. If you seem unreasonable, they may not bid. Professional contractors fear a bad experience or lack of referrals from a dissatisfied Owner who has unrealistic expectations. Show the contractor you are informed and that you are looking out for both his and your best interest.

Getting a contractor to bid your work

Some Owners are confused when contractors are not over-eager to bid the
work. If contractors believe you are not ready to do the work, or you are
just a price shopper, they may feel that you are not worth their time.

Here is how you can get them to bid:

Tell the contractor you are getting three bids. You are not looking for ten.

Explain you are not looking for the lowest bid, but the best value for your dollar.

Make sure to mention if you were referred, or saw their work and liked it.

Negotiating a good contract

Construction work is not an exact science. There are numerous uncontrollable conditions, such as unforeseen weather delays, material delays, working projects expanding in scope and impacting the schedules of pending projects, manpower problems, etc. Any one of these conditions can trigger a dispute. Most contractor/consumer disputes are caused by communication problems, unrealized expectations, and unforeseen additional costs.

Communication and expectations

A contractor must perform the work as specified in the contract. The contract is the critical deciding factor for resolving disputes.

To avoid communication problems or unrealized expectations, protect yourself by making sure you understand the contract. If necessary, ask for modifications.

If you have a special request, do not rely on verbal communication. Get it in writing.

Unforseen conditions

A good proposal should cover most eventualities. However, sometimes unforeseen conditions exist that don't become apparent until after the job starts.

Include a formula for calculating additional cost in the contract to prepare for the unexpected.

Five steps to conflict resolution

1. Evaluate the situation from both sides, because if the dispute is arbitrated or litigated, that is what the outside party will do.

2. Stress the positive. Discuss what is right about the project so that the dispute can be put into perspective and doesn't overshadow the entire
project.

3. Discuss the Owner/Contractor relationship and how a mutually agreeable resolution would be beneficial for both parties.

A Satisfied Owner pays his invoice timely, writes letters of satisfaction, and refers the contractor to others.

A Satisfied Contractor goes the "extra mile" for the customer and remains in business to provide service after the sale.

4. Reexamine initial negotiations and contract discussions in light of the new situation.

Is it possible that if both parties could anticipate the problem the contract would be different?

If so, this is an unforeseen condition and should be handled as a Change Order.

5. Resolve the dispute in writing. You may settle on a Change Order to the initial contract, let the contract stand without amendments. Even the "no-action" resolution should be in writing so that each party is in clear alignment.

Searchable CAL/OSHA Regulations Online

San Francisco Dept. of BuildingInspection