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11 questions to ask before signing with a contractor.

· October 2, 2012

Before sending out your bid package, talk to multiple companies to get more information about each.

Give each contractor a quick call to conducting a short phone interview as you connect, or you can choose to include a questionnaire as part of a simple interview process. It’s up to you, as it is truly a matter of comfort. If you have a lot or contractors to talk to it is easier to compile the interview questions into a single document that you can ask all of the prospective bidders to fill out and return, than it is to spend a lot of time talking on the phone to each one.

Get to know each contactor by asking them some questions. Here is a list of question that you should ask in order to decide if you want to send a contractor your bid package:

1. How many years have you been in business?

You want to know how much experience the contractor has.

0 – 3 years can mean the contractor is really new to the profession.

4 – 6 years and they should have some good experience under their belt, but there are still a lot conditions they have never encountered.

7 – 10 years; most conditions are old hat and something new is usually nothing to worry about.

+ 10 years and they are well seasoned and have seen just about everything there is to see.

2. How many years of experience do you have in the construction industry?

You want to get an understanding of how skilled the contractor is beyond the existing business. More years of experience in more parts of the construction industry means the more they will recognize each aspect of the job and better respect for the needs of other trades.

3. How large is your work crew and how many are permanent employees?

You want to know how much of the work the contractor expects to handle with their own crew. The more work they do themselves the more they have control over the quality of work activities. The more they outsource, the more opportunity there is for miscommunication and poor coordination.

4. Which trades does your company typically subcontract?

You want to know how ‘involved’ the contractor intends to be in the actual labor. Are they handling the transitions? If so, they may be better able to actually see if there are quality problems. Are they outsourcing or subcontracting out most or all the trades on your project? If so, they may not be watching closely enough to spot potential problems.

5. Do you require a deposit and if so, how much and what is it used for?

You want to know how financially solid the contractor is. Do they have the resources to mobilize and start construction, or ‘do they need a deposit to get started’ or ‘to buy materials’? If they can get going without an ‘upfront’ payment then they are more financially solid than if they need a deposit. I seldom recommend giving the contractor a deposit, but even I do acknowledge that there are times when doing so can be helpful.

6. What is your current workload?

You want to get a feel for how much attention the contractor can give your project. The fewer their staff and the more projects they’re working on, the more you should be concerned they can’t focus long enough to quickly knock out your job.

7. Do you use project schedules to help manage your projects?

You want to know if this company is organized. The more organized the contractor is, the less you’ll have to worry about. It doesn’t mean you won’t have to worry about anything; you’ll still need to inspect your project. The more disorganized the contractor the more likely for there to be problems, delays and the higher the price tag.

8. If we select you, with your current workload when would you be able to start our project and how soon could you finish?

Here is where you just flat out ask them about their production ability and if they could handle your job IF you select them. You want to see if their time frame fits with your planned schedule. Plus, if you select them this gives you some good contractual start and finish dates that the contractor has voluntarily given you.

9. Can you provide references and pictures of similar work you have completed?

Of course you always want to check up on their work. So asking for references should go without saying, still it is important to ask, so we include it on the list.

10. Are you interested in bidding on the project?

It may seem funny, but I find that this is a useful question to ask. Occasionally you’ll find a contractor that actually doesn’t want to give you a bid. When you meet that contractor, they will usually let you know right away. It happens for various reasons which we’ll have to cover in another article. The point is that if they do not want to bid the project, don’t take it personally. Be grateful that you know right away. That way you can just move on and you don’t have to spend any time chasing them for a bid you were never going to get.

11. We checked and noted that you have a ____________ rating with the Better Business Bureau, can you please explain the reason you think you have this rating.

Of course, if the contractor in question is not even listed with the Better Business Bureau, then you don’t even need to worry about asking this question. However, if you checked and you find that a contractor has a bad review or bad rating, ask them about it. Anyone can have that bad experience that follows them for far longer than they’d like and contractors are no different. Maybe the company was victim of a psychopathic ex-employee, an unusually difficult situation, or maybe the bad rep is for a very good reason. You won’t know if you don’t ask.

Categories : Bidding, Commercial, Project Management, Residential Construction

Tags : Contractor Interview, Contractor Questions, LinkedIn, Project Management

Tricks Contractors Use to Make Their Bids Look Lower

Posted by Richard Cartright

· April 9, 2012

The world of construction is very competitive. Most jobs are awarded to the lowest bidder, regardless of any other considerations. Since contractors need work in order for their businesses to survive, they can become somewhat desperate, doing a number of things to lower the apparent cost of their bids; not all of which are totally ethical.

The contractors who utilize these tactics are able to bid lower, because they are aware that they can make up for the difference after the contract is signed. More than anything, they are depending upon the idea that once the job is started, the customer will need pretty serious grounds to break the contact. So, they can find ways of increasing the contract price, without making the owner angry enough to cancel their contract and award it to somebody else.

So, what are some of these “tricks” which contractors use?

Providing Inadequate Allowances – There are a number of items which need to be paid for as part of the project, which the contractor needs to include in his bid. These include such things as utility hookups, building permits and liability insurance for the job site. By lowering the allowances, then “discovering” that these items cost more than expected, the contractor has a somewhat legitimate excuse to pass that change through to the owner. Another way that inadequate allowances are included is when decorative items must be selected by the owner. A $1,000 lighting allowance may be included in the bid, meaning that the cost includes $1,000 worth of lighting fixtures, to be selected by the owner. However, in a 5,000 square foot home, that may not be enough. Anything over that allowance would be legitimately charged to the owner.

Locating Cheaper Material – While everyone is trying to save a buck, there is a line that shouldn’t be crossed. When buying cheaper materials means accepting lower quality, the customer ultimately ends up paying for repairs and replacement down the road. The problem is that materials specifications generally aren’t sufficiently specific to prevent this. To try and create them that specific can be a monumental task. So, the contractor can often legitimately lower their cost and still complete the project. One way that this might be done is to buy green lumber. While this isn’t in agreement with industry norms, it is not all that uncommon in tract home construction. Generally speaking, green lumber is cheaper. However, due to its high moisture content, it will warp much more. That puts extra stress on the completed building structure, possibly causing problems such as walls that eventually start to bulge.

Excluding Parts of the Project Scope – Many plans and specifications leave wiggle room for the contractor to “miss” seeing something that needs to be done, such as removal of a dilapidated structure that is on the property. If it isn’t noted as a requirement, then the contractor can say that they didn’t know they needed to remove it, even though it’s in the way of the new construction. This allows them the opportunity to create a change order, charging the customer for this “extra” work.

Using Unqualified Labor or Sub-Contractors – Just as the client is putting the project out for bid, so does the general contractor. General contractors generally award the contract to whoever provides them with the lowest bid. While sometimes this works out fine, there are other times when it doesn’t work out well, especially if the sub-contractor really isn’t qualified or has a reputation for low quality. By accepting their bid, the contractor is giving away the customer’s quality.

As you can see, all of these appear somewhat legitimate. That’s what the contractor is counting on. They expect the owner to see those extra costs or lower quality materials as something that is totally acceptable. As such, they receive payment for a job that’s not so well done.

This is one of the places where a project manager, acting as the owner’s representative, can protect the owner from problems. Having the experience of many projects behind them, owner representatives know what to look for and where to find these sorts of loopholes. When a contractor presents a bid that is too low, they know where to look and what questions to ask, to ensure that everything which should be included, is included in the cost. Owner Representatives also know what they’re looking at, when they look at the raw materials brought onto the construction site, so they can tell if a contractor is cutting corners on the materials they are using.

Your goal, as the owner is to get your project done at a reasonable cost. The contractor’s goal is to make money. Unfortunately, they’ve got an advantage over you; they know tricks that you don’t. Having an owner representative protect your interest will help ensure your project gets completed in a way that’s fair.

Categories : Bidding, Uncategorized

Tags : Construction Management, LinkedIn, Project Management

The best way for contractor’s to get the job.

Posted by Richard Cartright

· March 6, 2012

Contractor’s know that the best way to get the job, is to have the best combination of good rapport, good referral(s), the best price.

From the very beginning, all contractors want to be your ‘friend’. They’ll want to come to your house and talk, be cordial and friendly enough, and some will soak up your time if you let them.

Contractors didn’t always appreciate referrals. With companies like Angie’s List and HomeAdvisor, that’s changing, but a contractor is still only as good as the current job. Past performance can mask current problems, and contractors can use a good referrals as a reason to have higher prices. Construction and renovation take time. Contractors do what they need to get jobs done and make more profit and a lot can go wrong between the start and finish. That can leave you with a bad taste in your mouth, and you’ll remember the headaches more than anything else.

I’ve seen people tell a contractor they are the only bidder, only to wonder why the price is higher than the budget. You want to help ensure you get a contractor’s best price, add competition and use Construction Conductor. They’ll keep their pencils sharp. Competition makes contractor’s work a little harder to get the job, but there’s a catch and contractors know it. Not all bids are equal and contractors have tricks they can use to make their bids look lower.

The best contractor does well in all three areas: they have great rapport, super referrals, and a fair and reasonable market-based price. Most contractors tend to perform well in one or two areas, but fall short when it comes to all three.

It is up to the You, the owner, to decide which attribute is most important. But you must be careful in deciding which aspects outweigh the others.

Like the balance in the figure on this page, if you place more weight on the rapport / good referral side of the balance, the contractor has little incentive to sharpen their pencil. If you place too much weight on the Price side of the balance, you might overlook character flaws or negative reviews from the contractor’s previous clients.

In the end, the best way to make you get a contractors best price is:

Be courteous while not too friendly (You can be friends after the project is done, if you still want)
Be casual about referrals (You will be making an objective decisions)
Mention the other anonymous bidders (Make sure they know they are competing)
Always negotiate (Be careful: Doing this the wrong way will backfire)

Here is more about how contractors cut costs to win the contract.

Categories : Bidding, Residential Construction, Uncategorized

Tags : Contractors, LinkedIn