What Should You Know Before Hiring a Contractor? - The Constructor (2023)

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Selecting the right and competent contractors is critical for completing any construction, repair, or improvement projects.

First, the owner needs to set a clear and detailed plan for the project. Then, a licensed contractor should be hired as they possess all the essential knowledge required to perform the work. At least three bids should be reviewed and the most appropriate one should be chosen and not the lowest-priced ones.

What Should You Know Before Hiring a Contractor? - The Constructor (1)

Usually, lower price estimates do not necessarily provide a good final product. So, make sure to review all prices and question higher prices as the contractor may give reasonable explanations.

The contract document is substantially significant since it is a binding document between you and a contractor. It protects you and compels the contractor to carry out the job as per the contract terms. Therefore, project phases and steps should be clearly stated in the contract document to avoid any disputes in the future. Additionally, payments and deadlines have to be agreed upon and written in the contract.

Reputable contractors are proud of their previous works, so they are happy to provide references which is a good sign. However, you should be alarmed if a contractor or salesperson pressures you to sign a contract or you cannot verify the contractor's license.

(Video) What You Should Know Before Hiring A Builder Or Contractor

Contents:

  • What Should You Know Before Hiring a Contractor?
    • Planning the Project
    • Selecting A Contractor
    • Bids
    • The Contract
    • Permits, Plans, and Specifications
  • Signs of Problems
  • FAQs

What Should You Know Before Hiring a Contractor?

Planning the Project

A detailed plan should be prepared for a project that specifies precisely the size of the work, finished appearance, and project cost. Careful planning will help the owner to receive accurate bids from the contractor. Therefore, determining the kind of work you want to do, what it takes to do it, and the professional hired to do the job will eliminate most problems and headaches that may arise during the work.

Selecting A Contractor

Licensed contractor possesses the required knowledge and experience to carry out the work properly. In addition, licensed contractors are bound by the laws and regulations that are designed to protect customers. So, in case of improper conduct, a customer is eligible to get monetary compensation from a contractor’s transaction recovery fund.

There are licensed general contractors and specialty contractors to carry out public, and specialty construction works. That is why a client needs to hire a contractor with the right specialty and experience. The contractor's license should be checked as the license number on business cards does not necessarily mean that a contractor has a proper license.

Finally, ask a contractor for local references and contact them to see how they were satisfied with the contractor's work. You may also speak with subcontractors, material suppliers, and financial institutions to check the contractor's financial responsibility that you intend to hire.

Bids

Bids are offers to carry out a job. An owner should get a minimum of three written estimates or bids using identical plans to compare the prices and contractors. Lower prices do not guarantee a good outcome for your work; therefore, do not blindly accept lower prices.

Discuss each bid with contractors and ask for an explanation regarding higher prices as they may be worth it. Conversely, an offer with lower prices may not contain all the works described by other competitors.

(Video) How To Hire A Good Contractor

The Contract

Any document or estimates you may sign would become a contract permitting a contractor to do the job. Therefore, do not sign any document until you correctly understand and agree to all terms. Before signing it, it is good to discuss the proposed contract, plans, and specifications with an attorney.

The contract for residential works must be a written document. Therefore, be as specific as possible. A written agreement eliminates disputes and problems. A good contract should contain the following terms:

  1. All the terms that a contractor and the owner agreed on and the extent of the work to be carried out.
  2. If you want to hire another subcontractor for part of the job or intend to do it yourself, mention it in the contract.
  3. Write financial terms like total cost, payment date, and (if present) penalties clearly in the contract.
  4. Oral promises and guarantees such as the start and end date of the project should be written in the contract document.
  5. Specify material types, for instance, quality, quantity, color, size, weight, and brand name.
  6. Mention anything important to you, such as complete and adequate cleaning, removing debris and materials, saving lumber for firewood, etc.
  7. Any change in the plan, alternative materials, change of completion date should be written and signed. The date of project completion might be affected by weather conditions and material availability.
  8. A good and reputable contractor should be able to front the cost of supplies without a large sum of up-front money from the owner. Commonly, an initial deposit for home improvement should not exceed 10% of the total project cost. However, an initial deposit of 30% is acceptable if work needs special orders and custom-made items. So, do not accept to pay a large deposit upfront.
  9. A contractor may ask for periodic payments (draw). Mention specifics of draws, and it should be based on work progress, not a date. So, if the work of a contractor gets delayed, your payments would be delayed as well. Do not make 100% payment until the project is completed and all necessary checks are made.

You should keep files of all papers related to the project. Additionally, keep files of all subcontractors working on the project. Keep the record of all subcontractors working on the project. For instance, the work carried out and the length of time on the job. Additionally, record the name of the material supplier and the date and type of materials delivered.

Project files may include:

  • Copy of signed contract and change orders if present
  • Plans and specifications
  • Bills and invoices
  • Copy of the contractor’s application for required permits and a copy of the officially issued permit for the project
  • Canceled checks
  • Lien releases from material suppliers and subcontractors
  • Record of all project-related correspondence like emails, texts.
  • Documentations like video and photos of the project start, progress, and completion

Permits, Plans, and Specifications

The contract should clearly state that all works should be done per applicable building codes. The building codes set minimum safety standards but do not protect you from poor-quality works.

The contract should also oblige the contractor to apply for necessary permits; otherwise, you may be legally responsible in case of failure to gain essential permits. Do not agree to any verbal changes in the plan which the contractor suggests. Everything should be written and signed.

Signs of Problems

You should be aware of the following signs of problems while hiring a contractor:

  1. The contractor’s name, telephone number, address cannot be verified.
  2. You cannot verify the license of the contractor.
  3. Salesperson coerces you to sign a contract through intimidation, threats, and scare tactics.
  4. The company or salesperson tells you that your house will be used for advertising purposes and hence you will be offered low prices.
  5. The salesperson tells you this is a special price available only if you sign the contract today.
  6. The contractor is reluctant to provide references, or references have reservations about the works that the contractor has conducted.

FAQs

How to select the right contractor?

1. Look for a licensed contractor
2. Verify license status through the website of the organization responsible for issuing licenses
3. Check references and examine past works of the contractor. Reputable contractors are proud of their previous works
4. Get a minimum of three bids, and choose the best one, not the lowest price
5. Demand a written contract and do not agree to anything, and you understand the terms
7. Restrict the deposit to a maximum of 10% and up to 30% if custom-made items are required
8. Do not accept pressure from salespeople to sign contracts without understanding it
9. Good contractors should listen to your suggestions and follow your demands
10. After checking all your concerns, you may accept and sign the contract

How much money should you give a contractor upfront?

The maximum deposit is 10% of the total project value and up to 30% of the whole project value when custom-made items are ordered.

Is it normal to pay a contractor half upfront?

(Video) 8 Things you need to know before hiring a builder.

No, it is not normal. Good contractors should be able to buy materials without asking for large amounts upfront.

How should contractors be paid?

Contractors should receive their payment based on work progress, not a date.

When should a contractor receive 100% payment?

A client should not make 100% payment until the entire project ends and necessary checks are made.

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FAQs

When selecting the external contractors What should you consider when assessing their competence? ›

When considering potential contractors for work, always ask to see evidence of their Skills, Knowledge, Attitude, Training and Experience (competence) – this would include their qualifications and training, affiliations to trade bodies and industry bodies, and examples of previous similar work.

What is a contractor HSE? ›

A contractor is anyone you ask to do work for you who is not an employee. The guidance tells you what you must do to comply with health and safety law when you use contractors.

What criteria should you set for shortlisting potential contractors for the works including a list of what information you should request? ›

This might include consideration of past performance, relevant experience, technical ability, sustainability, health and safety record, innovation, resource availability, management skills and systems, proposed methodology and so on.

What can I do if Builder doesn't finish job? ›

If the builder still does not complete the work

If the builder has still not completed the work within the specified period after you have sent the letter, your next step is to cancel your contract with the builder and state that you will be obtaining estimates from others to complete the work.

What are the factors to consider when choosing a contractor? ›

To help narrow your search, we've outlined five factors to consider when choosing a contractor for your building project.
  • On-time Delivery. Delays are expensive. ...
  • Reputation & Recommendations. A contractor's reputation is one of their most valuable assets. ...
  • Communication. ...
  • Quality of Work. ...
  • Customer Service.

What to consider when selecting contractors? ›

When selecting contractors, you should consider the following:
  • Level of industry/business-relevant experience.
  • Familiarity with the hazards of your industry.
  • Previous health and safety performance records.
  • Safety policies, risk assessments and training records.
9 Sept 2022

What are three responsibilities of the main contractor? ›

In general terms, a contractor is responsible for planning, leading, executing, supervising and inspecting a building construction project. The responsibility extends from the beginning to the end of the project, regardless of its scope.

What is the main role of a contractor? ›

A contractor is anyone who directly employs or engages construction workers or manages construction work. Contractors include sub-contractors, any individual self-employed worker or business that carries out, manages or controls construction work.

What are the main duties of a contractor? ›

The principal contractor must: plan, manage, monitor and coordinate the entire construction phase. take account of the health and safety risks to everyone affected by the work (including members of the public), in planning and managing the measures needed to control them.

What is the most important criteria for contractor selection in any construction project? ›

The most qualified vendor is selected on the basis of demonstrated competence, project approach, and ability to perform only. Criteria, like experience and past performance of the firm and the key individuals, capacity, financial strength, management plan, safety plan, quality assurance plans, are considered while ...

What's the 3 top most important criteria to consider when selecting a candidate? ›

Pay people what their jobs are worth. Also, look at their future potential and network. Do they have expertise in other areas where your company is looking to grow? Do they have an impressive network of individuals and contacts you can tap into in the future?

What important considerations must be taken in the shortlisting of candidates? ›

What's in?
  • Determine your criteria.
  • Decide a shortlist maximum number.
  • Try blind applicant screening.
  • Eliminate applicants who don't have the criteria you're looking for.
  • Screen candidates in, not out.
  • Try assessments during the initial application phase.
  • Conduct a screening interview.
  • Give your candidates a score.
25 Feb 2020

Can a contractor walk away from a job? ›

The most common reason that contractors find it necessary to stop work, McManus said, is that they haven't been paid for approved invoices. In that scenario, he said, contractors have the right to pull off the job as long as their contracts allow for it, providing they've complied with all of the notice requirements.

Can a builder walk away from a contract? ›

Q: Can either an Owner end or a Builder terminate the Contract during the construction period? A: No as a general right. However, either Party has a right to terminate for substantial breach of Contract normally after reasonable notice is given as defined by the Contract and a Notice of Termination is issued.

Do I have to pay a builder for poor work? ›

Legally, a customer cannot refuse to pay a builder for works completed. If they do so, the builder will be within their rights to take the customer to court. If this happens, a customer should seek legal advice to prepare to defend the claim by proving that the work was substandard.

What questions should I ask a contractor? ›

5 Essential Questions to Ask Before Hiring a Contractor
  • Would You Please Itemize Your Bid? ...
  • Is Your Bid an Estimate or a Fixed Price? ...
  • How Long Have You Been Doing Business in This Town? ...
  • Who Are Your Main Suppliers? ...
  • I'd Like to Meet the Job Foreman — Can You Take Me to a Project He's Running.

How do you know if a contractor is quality? ›

Referrals from neighbors, friends, and co-workers might be one of the best ways to find a quality contractor. The fact that the contractor has generated “good word of mouth” shouldn't be ignored.

What are the most important problems that you see with being a contractor? ›

One of the primary problems that many contractors face, especially when times are good, is a lack of capacity. You just don't have enough time, or enough staff, to complete every job available. With a limited workforce, a company can only do so much work.

What is the first thing you check when a contractor arrives? ›

You need to check that any contractor you engage has the ability to fulfil their contract with you. You can look at their past job history and performance, their income, the size of their business, and whether they've filed for bankruptcy.

What is the most important part of a contractor's job? ›

The scope of work might be the most important part of a construction agreement – even more important than the price. Without a defined scope of work, there's no way to know what work must be done.

What are 5 responsibilities you have when entering into a contract? ›

Tip. The five requirements for creating a valid contract are an offer, acceptance, consideration, competency and legal intent.

What are the benefits of hiring a contractor? ›

Pros of hiring an independent contractor
  • Saves money. ...
  • Greater flexibility. ...
  • Competitiveness. ...
  • Reduced liability. ...
  • Enhanced efficiency. ...
  • Increased liability for on-the-job injuries. ...
  • Less control over workers. ...
  • Temporary staff.

What are the benefits of using contractors? ›

Hiring a contractor
  • It can save you money – You may end up paying slightly more per hour for a contractor vs employee, however you are also less-likely to spend as much in an overall sense. ...
  • You can enjoy greater flexibility – One key reason business managers choose a contractor vs employee is because of flexibility.
22 Aug 2022

What are contractor skills? ›

What skills do you need for construction careers?
  • Communication. Communication is one of the most important skills you can have in a construction career. ...
  • Problem solving. Any construction job involves problem solving skills. ...
  • Self-belief. ...
  • Self-management. ...
  • Teamwork.
1 Jun 2018

What is the most important thing you should consider in the construction? ›

Planning. Detailed and strategic planning is the most important aspect of successful construction project management. The more complex the project, the more planning will be required. A well-planned project maximizes efficiency and provides a step by step roadmap for completing the work on schedule and within budget.

What are the three most important elements of delivering a successful construction project? ›

Your strategy should have three main attributes — the budget, design, and schedule:
  • Project Budget. For your business, the budget will be a critical method of choosing the right contractors for the work. ...
  • Construction Design. The design phase is also crucial to your project. ...
  • Work Schedule.

What are the key factors to consider before engaging a contractor for renovation works? ›

5 Factors to Consider when Hiring a Home Remodeling Contractor
  • Years in Business. Before you settle for any remodeling contractor, make sure that they have a trustworthy reputation among customers and peers. ...
  • Credentials. ...
  • Cost to Quality Ratio. ...
  • Regulatory Compliance. ...
  • Project Management Process.
17 Oct 2022

What are the 4 major considerations of hiring decisions? ›

Consider these four factors that can dramatically affect who you hire.
...
Be sure to consider these four factors when hiring your next employee.
  • Quantity of your candidate pool. ...
  • Quality of your candidate pool. ...
  • Urgency to fill the role. ...
  • Investment required for the new hire.
22 Feb 2016

What is the most important factor in hiring? ›

The ideal candidate will have experience in the field, skills that fit the job, and up to date knowledge. For many HR managers, finding and hiring talented and skilled people is the most important part, but there's also one more factor everyone responsible for hiring should consider: Attitude.

What are the 4 steps of selecting the right candidates? ›

Four Basic Steps to Hire the Right Person
  • RESUME SCREENING. The purpose of screening a resume is to determine if the applicant has the basic knowledge and skills needed to do the job you're trying to fill. ...
  • INTERVIEWING. ...
  • TESTING. ...
  • REFERENCE CHECKS.

What are the factors to be considered while hiring the candidate? ›

Key factors to consider when hiring employees
  • Know the Law. ...
  • Sort out an Employment Contract. ...
  • Pay the right rates. ...
  • Recruit the right people. ...
  • Start on the right note, Training and induction. ...
  • Set your boundaries early on: Discipline and Grievances. ...
  • Control costs by managing attendance. ...
  • Communicate.

What are the steps of selection process? ›

Selection Process
  1. Step 1: Job Design. ...
  2. Step 2: Position Description. ...
  3. Step 3: Forming a Selection Committee. ...
  4. Step 4: Recruiting. ...
  5. Step 5: Initial Screening of Candidates. ...
  6. Step 6: Phone, Video or other Pre-Interview Options. ...
  7. Step 7: Campus Visits and In-Person Interviews. ...
  8. Step 8: Recommendation for Hire.

What should you not say to a contractor? ›

Seven Things to Never Say to a Contractor
  • Never Tell a Contractor They are the Only One Bidding on the Job. ...
  • Don't Tell a Contractor Your Budget. ...
  • Never Ask a Contractor for a Discount if You Pay Upfront. ...
  • Don't Tell a Contractor That You Aren't in A Hurry. ...
  • Do Not Let a Contractor Choose the Materials.

How long can you keep someone as a contractor? ›

How long can a contractor work at a company for? There seems to be the belief (by some) that a contractor can only work for the same company for two years. This is completely false – contractors can work through an umbrella for an unlimited amount of time.

Can a contractor leave without notice? ›

As a freelancer or contractor, you have no right to a notice period, but that doesn't mean the contract can't be terminated early by your side - you just have to negotiate a settlement position that suits both sides.

Is it normal to pay a builder a deposit? ›

Builders sometimes ask for a deposit to pay for the materials to start the agreed job. If this happens after you agreed the contract: ask to see the invoice from the builder's supplier. pay the amount invoiced and insist on a receipt.

Can builder charge more after contract signed? ›

Under most contracts, your builder or tradesperson cannot change or increase prices unless there is a variation in the work they are completing. During delays, you should continue to pay your builder or tradesperson as agreed in your contract, and only after work has been completed.

Should you pay a builder upfront? ›

Don't agree to pay everything up front, in case something goes wrong or the contractor doesn't turn up. If they ask for a deposit to pay for materials, offer to buy them yourself instead of paying a deposit - that way, at least you own the materials if something goes wrong.

How much should a builder charge a day? ›

Due to the nature of construction work and regional variations in costs, the average builder day rate can vary quite a lot depending on the work you need doing and the individual builder you hire. As a guide, you can expect to pay somewhere in the region of £240 - £300 per day for a builder.

What is the safest way to pay a builder? ›

Here the safest option is to pay the money into a client's or escrow account, where it can't be withdrawn until the goods are delivered.

Can I charge my builder for taking too long? ›

You can also claim compensation from the builder for any expenses you incurred due to their failure to complete the work on time, and, if you hire a new builder to finish the job and they charge more, you may be able to claim this additional cost back from the first builder.

When selecting external contractors What would you consider when assessing their competence Nebosh? ›

The process of selection of right contractor should include evaluation of safety performance of the contractor, worker's compensation, their recorded injury rates, periodic safety programs being conducted and the competency level of contractor's personnel.

What are the factors that should be considered when assessing the health and safety competence of contractor? ›

The factors that should be considered when assessing the health and safety competency of a contractor include contractor's previous experience with the type of work; the reputation of the amongst previous or current clients; the content and quality of the contractor's health and safety policy and risk assessments; the ...

What are the four 4 factors used to determine whether someone is an independent contractor? ›

The Law Is Clear

Certain factors will define a worker as an independent contractor in every case: not relying on the business as the sole source of income, working at his or her pace as defined by an agreement, being ineligible for employer provided benefits and retaining a degree of control and independence.

What are the three requirements necessary to deem a worker competent? ›

“competent” means possessing knowledge, experience and training to perform a specific duty.

What are the common methods of selecting a general contractor? ›

Qualifications from a general contractor provide customer references, a list of pertinent projects, the GC's years in business, banking relationship, surety for bonding, and financial viability. Even if you have a positive personal interaction with a candidate, qualifications are still critical.

What are the information given to contractors before starting work? ›

Contractors will need public liability insurance and workers compensation insurance as well as appropriate work-specific licences and registrations, risk assessments, safety policies and training records.

What are the 5 important processes that needs to be conducted in completing a risk assessment in a manufacturing industry? ›

You can do it yourself or appoint a competent person to help you.
  • Identify hazards.
  • Assess the risks.
  • Control the risks.
  • Record your findings.
  • Review the controls.
10 Oct 2022

What steps should be taken by a construction company individual consultant or contractor to ensure the safety of its employees at a construction site? ›

Regular safety inspections and safety meetings have become standard practices on most job sites.
...
  • requiring hard hats on site.
  • requiring eye protection on site.
  • requiring hearing protection near loud equipment.
  • insuring safety shoes for workers.
  • providing first-aid supplies and trained personnel on site.

What are the 3 main factors that risk assessment is based upon? ›

While many individuals are involved in the process and many factors come into play, performing an effective risk assessment comes down to three core elements: risk identification, risk analysis and risk evaluation.

What are five traits of an independent contractor? ›

Some of the common characteristics of an independent contractor include:
  • Furnishes equipment and has control over that equipment.
  • Submits bids for jobs, contracts, or fixes the price in advance.
  • Has the capacity to accept or refuse an assignment or work.
  • Pay relates more to completion of a job.

What do you consider the 3 most important aspects of your employment? ›

When thinking about your current job situation, here are some important things to consider:
  • Your career goals. ...
  • The job's ability to meet your needs. ...
  • Your happiness within your position. ...
  • To determine if the job is a good fit for you. ...
  • To help you look for new opportunities.
9 Aug 2022

What is the most important competency that a staff must have? ›

Dependability, reliability, and responsibility. Employees who take responsibility for their actions, are dependable, arrive on time, do what they say, and don't let the others in their team down, are highly valued employees. Conflict resolution.

What are three 3 main types of competency standards that can be used to assess personal knowledge and skills? ›

Competencies are defined at three levels of attainment: Level 1 – knowledge and understanding Level 2 – application of knowledge and understanding Level 3 – reasoned advice and depth of technical knowledge.

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