Building a new home or renovating an existing structure is a serious undertaking that can have many ramifications. Even simple renovations can cost tens of thousands of dollars, and large projects cross very quickly into six figures. Careful planning and good communication can take a lot of the risk out of a project, which will ensure a positive outcome in the end.

Once you have decided on a plan, the first step is to find a competent contractor, and then do the background work to make sure that the contractor can get the job done. Many people look at a contractor’s prior work as a way of background research, but never determine whether the contractor has the financial wherewithal to complete the project. Ask the contractor for a list of his five biggest suppliers and an authorization to discuss the contractor’s credit status and payment history with the suppliers. Many construction jobs go awry because the contractor needs to be paid for his last job before he can start the next.  Worse, an undercapitalized contractor may fail to pay his suppliers, who file mechanic’s liens on the property. This can cause delays or may ultimately derail a project. If the contractor refuses to provide the financial information, take that as a red flag and look elsewhere.   Additionally, a search of courthouse records will help determine whether the contractor has been the subject of lawsuits or liens. 

Second, determine how the contractor actually does the work, in a step-by-step approach.  Does he own his own excavating equipment to dig the footers, or will he (and you) be at the mercy of a sub contractor?  Does he have his own framing crew, block layers, electricians?  Some contractors are general contractors who rely solely on subcontractors for every aspect of the construction project. Sole reliance on subcontractors can add delay to the job, and can also raise issues of quality control.  

Third, sign a contract for the job.  It is amazing how many six-figure construction projects go forward without a written contract.  The contract need not be fancy or lengthy, but it should set forth the scope and nature of the work, the milestones for completion and payment, and a mechanism for dealing with changes. This last point cannot be emphasized enough – no construction project goes ahead as planned, and it is imperative that both parties understand and agree to the need for changes in job scope and the costs involved. Changes should be documented and approved as they occur.  Finally, the contract should include a mechanism, such as a mandatory arbitration clause, for resolving any disputes that arise. 

Money spent on the front end of a project in planning and investigation pales in comparison to the money spent litigating a bad outcome. Making the investment in a proper investigation and preparation of a suitable contract can yield great returns in the form of a successful building project.

For assistance with your building project, please feel free to contact us.