Tuesday, March 24, 2009

What to consider in your contractor?

You thought you did all the right things before you hired a contractor, but now you have a problem. It starts out simple enough; something a bit queasy sets up in your stomach. You know, the little feeling that says ‘something is wrong here’. It then progresses to the point where you KNOW something is wrong but you don’t know exactly what it is. From there, everything looks bad and every day brings new concerns. That is if the contractor is still around.Assuming you have done all the right things PRIOR to hiring a contractor and you want to minimize the damage caused by a contractor with problems, knowing the warning signs of a bad contractor and understanding some of the things that can go wrong will help you avert a potential disaster . While there are many reasons for a project to have problems, not all are because of a bad contractor. Knowing the difference is critical.Some of the warning signs of a problem contractor:• Lack of communication. It is an understatement to say that good communication usually leads to good results in contracting. If you are not able to consistently reach your contractor or have him return your call in a reasonable amount of time, be concerned. Are you getting progress reports on some pre-determined frequency? When a problem arises, are you made aware of it and what the solution will be? If you can answer no, you have a potential problem contractor.• Deviations from the contract or scope of work. Changes happen, however you should know immediately, and approve of in writing, any changes requiring additional costs and/or delays in completion. If your contractor says he will tally up the costs later, or says don’t worry about it, look out. You could be on the hook for a lot of money and no easy way to fight it. • Lack of daily activity and progress. Some contractors have so much going on at one time that they don’t devote the time needed for every job. If you go days or weeks with no action and no explanation, watch out. Does he tell you he will be back (tomorrow, next week, etc) but never shows when he says? You don’t need this type of person. Some contractors are using the next job’s funding to pay for progress on your project so of course their priority is find other jobs. Every job then gets just enough activity to keep you quiet. Watch out for this business model.• Little or no consistent on-site supervision. If you were led to believe that the top man, or the best employee was going to be on site all the time, are they? Are decisions being left to subordinates who aren’t qualified or capable of making these decisions? Are subs coming and going with little or no supervision? It doesn’t matter how qualified some employees and subs are, a large project requires capable, on-going, and competent supervision.• Requests for payments don’t correlate with the progress schedule in the contract. Never let your payments get too far ahead of the schedule. While most contractors are not able to, and shouldn’t, finance the project out of their own pocket, you shouldn’t be financing their other projects either. If a draw or payment schedule was agreed to, both sides should adhere to it. Red flag a contractor who is always asking for more or larger disbursements than agreed to. Another issue to watch for is when the contractor asks you to make the check out to someone else rather than the company you contracted with. This may be an attempt to hide a financial problem with the company or a way to shield revenue from taxing authorities.

Friday, March 6, 2009