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Thursday, February 2

for your reference: tips on paying contractors

Welcome to All in the Detail... I am so glad you are here! 

Over the years, I have collected quite an assortment of reference guides for my clients.  Many of them file these 'sheets' in a three ring binder for their reference on future projects .  I thought that this blog might be a great way to share some of these reference 'sheets' with you, too!

headache
Avoid headaches with construction bids:
1. Demand itemized bids from your contractors. Ask who will work on your job. Will the individuals be employees or subcontractors? Obtain a list of all subcontractors and suppliers who intend to work on or deliver materials to your property. The effort will be worth it.

imagesCARK67QV2. Negotiate with your contractor one of two things: #1- Negotiate to pay only the contractor and allow him to pay all subcontractors and material supplies. If you trust your contractor, this will save you time and money in the long run. (but could create additional headaches for you if your contractor does not handled this properly) #2- Negotiate the right to pay each individual yourself. If you do this, you must also receive information for each subcontractor and vendor that will be used (insurance certificates and licenses). This is a lot of additional work but must be done if you are going to write the checks.
trust 3. Resist paying for goods and services not rendered. Often contractors ask for money up front. This is an extremely dangerous thing for you to do. Deposits should only be forwarded for special order non-returnable items that a contractor may have to purchase for your job, or where state law requires it. If possible, only pay the minimum amount required by state law. Monies for anything else are a sign that the contractor is either financially weak, or possibly doesn't trust you. Trust in a building relationship is a two-way street. You are entrusting your most prized possession to the contractor. You are trusting him or her that they will not harm your property. You are trusting that they will start and finish the job in a timely fashion. Etc., etc., etc. Surely they should trust you!!!!
ConstructXYZ 4. Demand itemized bills from the contractor at each payment period. Compare these bills with the amount of work performed and the itemized bid you received at the beginning of the job. If there is a discrepancy, investigate what is wrong. Do not pay the bill unless you feel it is correct. If you pay too much money as the job progresses, quite possibly you will have, for example, $10,000 worth of work yet to complete, but only $2,000 of your money left to pay. Thousands of homeowners have found themselves in this precarious position.
write a check 5. Do not issue final payment to a contractor until you are satisfied with the work. However, do not abuse this practice. For example, if there is a tiny $100 scratch on a cabinet, it is unfair for you to withhold a $10,000 payment. Hold back $200 and release the rest. Be reasonable. Treat the contractor as you would like to be treated. Remember, if you pay a contractor before all work is complete, you will be relying on HOPE alone with respect to the uncompleted work. Never rely on hope.

Two Important Tips to Remember:  1. Do not pay for unfinished work, 2. Compare bills with work performed by the contractor to assure they match.

Hope this reference list will come in handy for you in the future!