Tips For Hiring a Contractor

Selecting and Working with a Contractor – from Start to Finish!

This article discusses the following: how to select the right contractor, what to avoid, getting quotes, the contract, payment arrangements, and how to deal with problems that could arise.

While involved renovation projects, such as converting a bungalow into a 2-story home, require that the premises be vacated, less complex projects allow homeowner and family to continue living at the site throughout the project. Inconveniences and disruptions of daily routine are unavoidable, so should be expected.

Major projects often require the services of an architect or other professionals such as engineers, heating contractors, and landscaping contractors. Blueprints and building plans are not only required to obtain building permits and other municipal approvals, they are also the basis for the renovation contractor’s price quote.

When making plans, be realistic about the amount of time it will take to complete the project. Also be realistic about costs; full cost quotes plus an additional 10% to 20% contingency fund for changes and unexpected expenses should be planned on.

Unless the project will last only a few weeks, it is wise to discuss your project with neighbors. They will appreciate advanced notice that noise, dirt and clutter will be unavoidable at times, daytime activity will be increased, and that vehicles belonging to the contractor and crew will be parked along the street until project completion.

If you will require the services of both a contractor and a designer, get them together as a team as early in the project as possible, so each party can benefit from the other’s experience and expertise. Not only will the project itself go more smoothly – but end result will be the best possible.

Have the designer or renovator provide you with sketches detailed enough to provide you with an idea of what to expect in the way of time involvement, what services from other professionals you might require, materials needed, and project expense.

After carefully planning the project and obtaining as detailed a plan as possible, you are ready to select a contractor. Only then will you be in a position to seek realistic bids on the project.

When looking for a qualified contractor, use all available resources. Word of mouth recommendations from others who have had similar work done recently, information from local licensing agencies, and Internet resources like HandyCanadian.com are all helpful tools.

To narrow down possible candidates, request each contractor’s business license number and check it out with the local licensing office. The law requires contractors to have a licence. By contacting your municipal licensing bureau you can confirm that the company has a licence, how long it has been in business and whether any complaints have been filed against it in the past.

Make sure each candidate carries public liability and property damage insurance. Take the time to check with the insurance agency to verify the policy is still in force.

Another basic requirement, one every contractor with employees should meet, is the provision of Workers’ Compensation; a type medical insurance also known as “workers’ comp.” Any sub-contractor hired by the contractor should also be covered.

If the contractor is uninsured and/or has uninsured employees don’t even consider hiring them. Otherwise, you could be sued and held monetarily responsible for worker’s injuries sustained while on your property. A fate more than one project owner has been forced to deal with, simply because of a hasty hiring decision.

Check with the Better Business Bureau (BBB) to discover which contractors or firms they represent may have had complaints filed against them. Get as much detail as possible to determine whether the complaint was fair or not.

Ask each candidate how long they have worked in the area, and whether or not they have experience with projects similar to your own. If so, get the names of homeowners they completed the projects for and contact them. Verify the information, and ask about the quality of work, and whether or not they would ever use the services of the contractor again.

Do not be concerned about possibly offending the contractor by requesting such information. Reputable contractors will not be offended because they will have nothing to hide.

Narrow your candidate list down further to determine which contractors to get bids from; get bids from at least 3, but the more the better.

The only way for project bids to be assessed fairly and accurately is for each contractor to be provided with exact copies of plans for the detailed project. Have each contractor use identical forms when making a bid.

Be sure the quote includes materials and fixtures that meet project specifications, which party will be responsible for obtaining and paying for all necessary licenses, whether or not the project site will be cleaned up and debris hauled away at the end of each work day, the project completion date, the total clean up of project site once project has been completed, amount of down payment – if any, and a payment plan.

Providing identical project plans and forms makes it easier to select the contractor who best meets your needs. The form itself should be thorough; requesting specific – not vague – information. Avoid terms such as “estimate;” instead, use terms such as “bid” and “quote.” Avoid phrases such as “of like kind” in regards to materials to be used.

When going over bids, remember that the lowest bid is not always the best. Examine bids carefully to determine which contractor provides the best service, selects the highest quality materials for your project, is most experienced, and seems most capable of completing the project to meet your expectations, in the best timeline possible.

Things to be Wary of:

• Contractors that request large deposits “to buy materials.” Established, reputable contractors maintain charge accounts with their suppliers.
• Contractors who are vague; demand detailed, written bids and contracts that specify in detail the project, materials used, and work to be performed.
• Contractors who provide you with a post office box instead of a physical address, and a telephone answering service instead of their own telephone number for contact purposes.

Only after careful consideration are you ready to make your selection. When you do, it is time to get the contractor and designer (if there is one) together for the purpose of obtaining a final drawing, and an a final quote from the contractor, based upon any plan revisions.

If there is any difference of opinion between your renovator and design professional about procedures or materials, now is the time to resolve it. Taking care of these type issues now will avoid significant changes during construction that would cause delays or affect cost.

Once everything has been agreed upon, your next step is to get everything in writing. Contracts should be detailed and specific. Insist that both the contractor and designer sign the contract.

When agreeing to payment arrangements, remember that the Construction Lien Act allows you to withhold 10% of the total cost of the project for 45 days beyond the substantial completion of the project.

This protects you if the renovator fails to pay all subcontractors and suppliers; it is not withheld, however, to ensure that the job itself is properly completed.

The piece of paper, or contract, describing work to be performed, detailing the project, and quoting a price for the project, is a legal document, binding to all parties who sign it.

For that reason, make sure you read the contract carefully before signing it. Make sure all aspects of the project are accurately described, and that everything promised and agreed upon is included.

Never sign any document you have not read carefully, or that contains only vague references to vital aspects of the project. Once the contract has been signed, the contractor is not legally bound to promises not included in the contract.

If something detailed in the contract is not clear to you, ask for an explanation and request that a revision be made to the contract. If still in doubt, discuss the matter with a reputable lawyer.

The Contract Should Include:

• Names and physical addresses of the buyer and seller (yourself and the contractor). Be sure that the contractor’s firm, if there is one, is the same one referred to in the contract, and that the contract includes the firm’s full title, address, telephone number, and the name of the firm’s official representative. The physical address of the project site should also be included.

• A detailed description of the project, including plans and drawings, when applicable, as well as specific materials to be used. Included, too, should be all work being subcontracted (i.e. plumbing, wiring, etc.). Clear and concise job specifications should be outlined to avoid problems and misunderstandings that could later arise.

• All required building permits should be noted, as well as who will be responsible for obtaining and paying for them.

• Notation that all work will be done according to local building codes.

• Notation that the contractor will clean up the construction site at the end of each workday, and remove debris, and that all debris will be removed by the contractor at the completion of the project.

• A statement of all warranties, with an explanation as to what is covered, and for how long.

• A statement of the contractor's public liability and property damage insurance.

• Starting and completion dates; penalties, if any. It is also a good idea to get in writing how many days each week the contractor plans to work on your project. This is because some contractors take on several jobs at once, dividing their time between them.

• Project cost and terms of payment.

• Any other information, terms, or promises, vital to the project.

Remember, verbal assurances are worthless; get everything in writing! Never agree to “progression” clauses in the contract that require payments at specified times, regardless of amount of work accomplished.

Although there are printed contract forms, there is no such thing as a “standard contract.” Each contract is as individual as the project itself and agreed upon terms. All spaces in a contract should be filled in; blanks not applicable to the project should be filled in with “N/A” (not applicable), or NIL (nothing). Clearly strike out any aspect of the contract you do not agree with, or request that the contract be rewritten.

If there is to be a contingency clause (allowing additional charges in the event of unexpected problems – such as running into solid rock when excavating a basement, agree upon and note in the contract any restrictions.

Contingency clauses are legitimate aspects of a contract, and a better alternative to agreeing to a higher project quote that might be given to cover such unseen possibilities. Prudent buyers will keep 10% to 20% of projected price of the project on hand for just such purposes.

Smaller projects, such as painting or laying down carpeting, don’t require as detailed a contract. However, no job – regardless of size – should be initiated without at least a written statement of work to be performed, materials to be used, warranties, project cost, and start and finish dates.

Even when specific project materials have been agreed upon, a situation might occasionally arise when another type of material is used, instead. For instance, when the original materials are no longer available, or the homeowner has decided upon a different material.

At such times, and for the protection of both parties, changes should never be made without the written approval of the homeowner, and a signed statement from the contractor reflecting either a credit due or extra charge for change in materials. If the change will affect project completion date, that should also be noted.

When renovations are being financed by a loan, it would be a good idea to check and see whether or not the loan authority must also approve any changes once the contract has been signed. Find out who will be responsible to pay the extra funds, if any, and how funds will be paid.

The key to avoiding unnecessary project problems is open, regular communication! Therefore, touch base with the contractor frequently to see how the project is progressing.

If you’ve any questions or concerns about the project, discuss them freely with the contractor. Schedule a meeting with your contractor when they can discuss these matters without distraction.

Remember, project success is a two-way street. Be flexible when minor changes occur that will not affect the appearance, function, or quality of the project. Note any changes made in writing.

If a problem does arise and a disagreement develops between you and your contractor, stay calm so that tempers do not flare. Set a time for you and your contractor to get together, and go over the contract. Listen to your contractor’s side of things, and request they do the same for you. If the problem remains, seek another opinion from a knowledgeable friend; if the situation is serious enough, discuss the situation with your lawyer.

The most common problems that arise include poor workmanship, delays, and misunderstandings about the scope of the work. If your contractor has taken on other projects simultaneously with yours, causing your project to stall for days or weeks between visits, insist they adhere to a regular work schedule, and complete your project at the promised time.

If your contractor refuses to comply, send them a registered letter threatening to cancel the contract and seek a refund of the down payment, as permitted by law in some provinces. This may help to rectify the problem, especially if the letter notes a copy of the letter has been sent to the consumer protection department of your local government, or to the contractor’s bonding company.

Bad workmanship and poor business practices can be reported to the government department from which the contractor obtained their license. This office will take necessary action if deemed appropriate.

If you think some of the work is not up to local or Canada Mortgage and Housing Corporation (CMHC) standards, report it in writing to the appropriate inspection department. If it is determined that the quality of work does not meet code requirements, the contractor will be forced to make necessary corrections at their own expense.

To Avoid Problems:

• Select your contractor carefully; check all references.
• Ensure the contractor is properly licensed and carries the proper insurance before hiring them.
• Visit the work site at intervals and discuss progress with your contractor; keep communication with your contractor open, and make yourself available to answer questions or discuss situations that might arise.
• Before hiring a contractor, ask if they plan to work on other jobs while working on yours. If so, ask how many days each week they plan to work on your project, and get it in writing. Work schedule terms should be outlined in the contract.
• Make sure the contract is as detailed and specific as possible.

Down payments are seldom requested on routine home improvements and repairs. Larger projects are even sometimes initiated without a cash advance, although a 10% to 20% down payment is not unreasonable. If funds are requested upfront for appliances, materials, or custom cabinetwork that must be ordered by the contractor, make the check payable jointly to the contractor and supplier.

Always make payment with a check. Checks are safer than carrying cash, and provide a record of payment. If you do pay the contractor with cash, get a signed receipt upon payment.

Smaller jobs that only take a few days to complete most often require one payment upon completion. Larger jobs, however, usually require multiple interim payments. Even then, payments should be paid only for work completed, not for project amount. Always holdback some money in reserve to ensure the job is completed to your satisfaction and contract guidelines.

Another purpose for withholding some money on all payments is to protect yourself against liens that could be placed on your property by suppliers or workers that the contractor failed to pay.

All provinces, except Quebec, have lien laws that limit your liability to a certain percentage of the contract price. Unless your contractor has provided full documentation that all suppliers have been paid in full, it would be prudent to without this amount from payments, for the time allowed for creditors to register a lien on your property. This is usually between 30 to 60 days after the contract work is complete.

Even after the period of time has elapsed, you or your lawyer should check with the land registry or land titles office before paying the holdback to make sure no leans have been placed on your property. If a lien has been applied, make no more payments to the contractor until you have received notice that the lien has been discharged.

Because lien legislation differs from province to province in Canada, it would be wise to contact a lawyer to verify the rules and conditions of liens in your jurisdiction. And never hand over final payment or sign a certificate of completion or any other document that releases the contractor from further responsibility until everything you were promised has been done. Accept no promises that they will be back “in a few days to finish everything off.”

By following this step by step guide to planning a project, finding and hiring a qualified contractor, contract content and signing, and dealing with problems, you help insure the success of your project, and eliminate problems that might otherwise have occurred.

For more information we also suggest visit the following links provided by the Ministry of Government Services for more useful tips and advise on hiring a contractor and to protect yourself and your home during renovations.

• Home Repairs and Renovations
• Hiring a Contractor
• Get it in Writing
• Home Renovations Consumer TipSheet (PDF File)

This is a downloadable PDF File (1.3 megs) provided by The Ontario Home Builders' Association covering the following topics :

• Planning Your Renovation
• Finding a Professional Renovator
• The Initial Meeting
• The Estimate
• The Final Design & Quote
• The Work
• What to do if a Problem Arises
• Post Renovation Service

Click here to download