Now that you have chosen your contractor to work on your project lets have a look at your contract. Here are some key elements to what you should see in your contract...
1- your contract should have the total price that you are paying & WHAT you are paying for CLEARLY stated.
This should include all the materials & services that your chosen contractor will utilize during your construction project. This contract WILL NOT include anything that you would be adding later. That is called "change order" or "add-on" which I will discuss later on...
As stated before, estimating is not an exact science and materials prices do change frequently. Right now the materials markets are extremely volatile so be prepared to possibly have to shell out more money at the end if your contractor had to pay more for your materials than originally quoted to you.
2- There should be a "Scope of Project" or "Job Notes" section of your contract. These notes go more in depth as to what is included in your project. This part of the contract also could specify upgrades and options to the contract that are available. Our company likes to offer the "green upgrades" that everyone asks about. (more about "green" products later on...) These notes will break down your project in pieces that the client can better understand...please see the example.This part of the contract SHOULD tell you exactly what is going to be done and relate to the price breakdown part of the contract. Every contractor uses a different method of contracts. Some use an accounting software, others use spreadsheets..some use in depth contractor software... so your bids may look very different from what you see here. I wanted you to see a sampling of what you should see. I have seen contractors who use a list of WHAT ISN'T INCLUDED in estimates & contracts which makes it very confusing as to what a client would be paying for. If your contractor only offers you a list of what is not included, move on. It is very important to understand what exactly is included with your contract. We have come across too many clients that have gotten estimates that were 500% more than our estimates and did not include even half of what we did. If your contractor did not include notes did they break it down for you on a spread sheet or other format so that your expectations were clear? Don't be afraid to ask questions and get it in writing if you want to add any alterations to the project!
3- The contract price should be very clearly stated with a payment schedule. As shown in the first image on this page, you can see what the total contract price is for Client A. NEVER PAY A CONTRACTOR 100% DOWN. (If you have a very small job under $2,000.00 & have used the contractor before several times, I would say go ahead). Many contractor's break down their payments into schedules. Some require 50% down, 25% mid & 25% end. Others may break it down to weekly payments, others 1/3's... It all depends on the contractor. If you have a lot of special order items that will take weeks to arrive, it is a good idea to pay for and order those up front so that the contractor doesn't have a long break waiting for materials to arrive. You, the client have to be comfortable with your monetary arrangement. Talk to the contractor about what you are comfortable paying.
With the current credit markets, asking contractor's to order materials on their credit is an option very few are willing to offer right now. For many small businesses, credit lines have been cut dramatically because the usual lenders don't have the money to lend. What hasn't been cut, the interest rates are out of this world! Lake Michigan Beach Builders is a debt free corporation and we only operate with cash.
4- The time line of your project should be clearly stated as well. Again, every contractor will vary in their time lines but make sure it is stated in the contract. You don't want a 2 year kitchen remodel. The time line is just a guide and there are things that happen that could slow down a project. One example is constant change orders and add-ons to a project. Those are the No. 1 setback in a project. Be understanding of the contractor's vendors. Many special order items take anywhere from 5 days to 6 weeks! The contractor does not have any control over the manufacturing or delivery process! Weather is also a factor! Make sure that you have snow plowing services available so that the contractor and his SC's
5- Ask for a copy of your contractor's liability and/or Workman's Compensation insurance to keep on record with your contract. Not every contractor has WC insurance. If yours does not, don't panic! Many contractors have to hire Independent Contractors or sub contractors to help them complete the work. The IC or SC has his/her own insurances. Ask your general to provide those documents when you hire him/her.
6- Make sure that the warranty information is clearly stated on the contract. If your contractor SAYS he offers 5 year workmanship warranty, it would be smart to make sure you have that in writing. Make sure that the workmanship warranties from the mechanical contractors (plumbing, HVAC, electricians) is also included in your contract if your contractor is providing them.
7- Be smart. Protect your investment and your money by doing your research. DON'T be afraid TO ASK for contract CHANGES before YOU SIGN. We have changed contracts NUMEROUS times to make sure our clients are 100% comfortable with their contract.
I hope that this has been useful for you! If you are looking for a contractor in Southwest Michigan, I hope that you will give Lake Michigan Beach Builders the opportunity to bid for your project!
More articles coming soon....
