So, you have decided to remodel your home or make room updates. You begin the process by speaking with friends and colleagues to hopefully find a reputable contractor to perform the work. You meet with several contractors and receive several estimates for the work you need doing. Now comes the hard part, who do you choose, do you go with the cheap option, the expensive option, the one in the middle. This decision-making process is a mixture of price, services offered and the feeling you get from the contractor.
Regardless of the contractor you choose, it is imperative that before you start work or money changes hands you need to insist on a construction contract that details several key points:
Absolutely Required: Verify your contractor has General Liability Insurance that is in good standing and they provide you with proof of said insurance. This is absolutely critical to make sure of before having a contractor work on your home. This is for your protection.
What should be in a contract:
Project Objective: The overall objective of the project, what are the goals of the project and what will the end product be. This is required for clarity and setting expectations.
Project Duration: How long will the project take to complete. This cannot be open-ended; the duration lets the customer know you are committed to the work and have an end date in mind.
Project Scope Detail: This is crucial, the scope should list in detail what exactly will be done and in what order. Specifics matter here, the contractor should have the ability list out the steps in detail to make sure everything is covered. This may seem like overkill but having the detail helps create proper expectations and catch misunderstandings.
Lead Times: Everything required for a home remodel can’t simply be picked up from the nearest Home Depot. Some items have a manufacturing time or lead time. These items need to be clearly spelled out as they will have an impact on the overall project duration.
Exclusions: This carries the same criticality as a detailed scope. The list of exclusions clearly lays out what is not included in the project. As every each part of your home is connected to every other part it is paramount that this list is accurate and detailed. This keeps projects from becoming a never-ending runaway train.
Project Deliverables: Self-explanatory, what will be delivered.
Project Fees: What will it cost, what is the structure of the fees, it is a fixed price estimate or a time and materials estimate.
Warranty: Unfortunately a lot of contractors have a 30/30 warranty which means 30 feet or 30 seconds, whichever comes first. A reputable contractor will provide a warranty on workmanship for a period of 2-5 years from the date of project completion. This should be clearly spelled out in the contract.
Contractor Responsibilities: For the duration of the project, what are the responsibilities the contractor. This details what to expect from the contractor and what they will take care of. This will be different for each job and needs to be specified.
Customer Responsibilities: Every project comes with certain responsibilities for the homeowner as well. Make sure the room is empty, the contractor has access to the worksite, appropriate decisions are made in a timely fashion
Payment Terms: This needs to be crystal clear. What is the deposit required, what are the progress payments based on specific milestones? Clarity in payment terms and what is expected will eliminate a lot of issues throughout the project.
Contract Termination: What happens if things go south, what is the process for terminating the contract on both sides. What gets paid up until that time.
Arbitration: This is critical, arbitration is an effective alternative to dealing with the cost and process of going to court. It is a much more civil process for resolving disputes and does not clog up the already overwhelmed court system.
Change Order Process: Just as important as the initial contract, the change order process details how changes in project scope will be dealt with. Things can get muddy really quick if there is not a formal change order process. This protects both the contractor and the homeowner from runaway scope and price.
A construction contract, in all honesty, is a key indicator of whether you have hired a reputable contractor to complete the job. In simple terms, it defines the parameters of the engagement and acts as a baseline for the project. Of course, there could be changes and additions, the contract lays out how they will be handled.
Your home is most likely the largest purchase you will ever make, don’t trust it’s upkeep and improvement to a fly by night organization.