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The Wrong Contractor Will Sink Your Project

Thu 28 Dec 2006 - 14:12

The Wrong Contractor Will Sink Your Project
By Glenn Grundberg

So, your plans are approved, the financing is all arranged, and you are ready to build. Now all we need to do is find an Honest, Competent, Organized, Financially Stable, Highly Professional Contractor to oversee and build the project.

Oh, and they must be able to work within your budget, too. Well, if you are just getting around to selecting a Contractor to work with now, you are in trouble, especially if you have a tight schedule and need to start right away.

I can tell you right now, these types of Contractors are Few and Far Between. That's because they are SO in demand, that they can afford to pick and choose their customers and work. Truly professional Contractors will not put on people willy-nilly just to meet a demand, and as such, may not have the manpower or be willing to hire to take on all the work they are offered. That doesn't mean you have to settle for second best, though. But you do need to plan ahead.

If you already have a qualified, known Contractor that is willing to schedule the work based on past experience with you, then you are very fortunate, and just need to nail down a price and terms with them. If not, at the same time you submit your plans for permits to your local authority for review, you should also be submitting them to a "short list" of at least three, but no more than five Contractors for base bids. This ensures that you have time to correctly review the scope of work bid by the various Contractors, and make an intelligent, informed selection. It also allows your selected Contractor to block out the time and resources they will require to complete the project in the anticipated time allotted.

But how do you go about getting Qualified Contractors to bid the work? Well, the best way, of course, is through a prior working relationship either directly, or through a relative or close friend. But take any referral with a grain of salt- past performance by a Contractor, unfortunately, is no guarantee that YOUR job will go smoothly.

The next best way to build a bidding list is by asking at your local building supply house. By this I don't mean the big orange box (you know who I mean), I mean a "Real" Lumber yard or custom millwork shop. They will usually be happy to give you some names of Contractors who are known for quality work. One benefit to this is that they will usually be giving you the names of their best and most stable customers as well, which can be reassuring as regards the Contractors financial stability. I mean, they aren't about to drive work to a deadbeat that doesn't pay his material bill on time, right? Once again, be wary of any special relationship that you sense between the yard and the builders, especially if they will only refer one person for the work.

The worst way is the telephone book. Highly competent Contractors don't usually have yellow page ads. In fact, the best do absolutely NO advertising whatsoever. They are so busy just by word of mouth, that there is absolutely no need for the expense. That's not to say that you shouldn't call some of the better looking ads if you need to get a few more bids, just be very cautious. Require references for several RECENT projects, and CALL THEM. If you get bad news, or a lukewarm response, don't waste your time- drop the Contractor from the list.

Once you have your list together get drawings or sketches out to them immediately! Send them under a cover letter stating the detailed scope of work to bid and the due date that bids must be turned in by. This is VERY Important! Require a bid date, or you will get put off! It's just the nature of the business. Many small Contractors, while excellent trades people and craftsmen, may do their estimates in the evenings or weekends. As a small Contractor myself, I can tell you that sometimes it's very hard to sit down and force yourself to push paper after a long day on the projects. Don't be afraid to call them a few days before the bid is due, and again the day before. This will ensure that they don't put it off until the last minute, and will help you get a responsible, accurate estimate.

Once you have all the bids back, you must review them for completeness and accuracy first. Does everyone bid the same scope of work? Are there exclusions and qualifications to the bids? For example, does one Contractor exclude the finish landscaping, while another includes it? What's the dollar difference in their bids? Will the difference MORE THAN cover the exclusion? If not, the inclusive bid is a better deal from your standpoint. I mean, if the bid with the exclusion is $5000 cheaper, and you can get the excluded work done yourself for $3000 by your landscaper, then you have effectively saved $2000, you see?

Adjust the bids for exclusions, and note the adjusted prices on a review sheet. Now comes the important part. The actual selection should be based on the most accurate, thorough, and responsible bid, not just price. Price is important, but it should be secondary when making a decision of this magnitude. Saving a few dollars on the bid, only to get hammered on changes or by a non-performer is not recommended! This is where the references and general reputation of the bidding Contractors should be looked at. I usually recommend that you assign a point value to each criteria and divide by the number of bidders to help you arrive at a decision.

Give points for Price, Reputation and References, Equipment, and Personal Appearance. For example, you have three responsive, qualified bidders. Bidder #1 has the best price, so they get a three for that (give points according to how many bids you received to keep it simple). But, #1 also has the worst references, so they only get a one for that. Out of all the bidders, they had the second cleanest and maintained truck, so they score two. But, they showed up at the initial meeting unshaven and covered in mud. Score one. Total for contractor #1: 7 points.

Bidder #2 was the highest priced, but they had threes in all other categories. Score: 10. Bidder #3 winds up with an 8. Now we look carefully at the prices. Bidder #1 is low, but their price seems TOO low. The other two bidders are within a couple of percent of each other, but #1 is 15% lower. Big Red Flag, especially taking into account their score. My advice? Forget about #1. Now as to the other two, they may be so close as to make the decision very difficult. At that point, you have to go with your gut. Who do you like the most? Who do you think you will be able to work best with? Remember, this person will be in your life for weeks or months, depending on the scope of work, and you are going to need to work together well. So at this point, pick the one that suits your personality best.

About the Author:

Glenn R. Grundberg, BSEE, RCDD/lan, IBEW JW is a General and Electrical Contractor, Master Electrician, and Low-Voltage and Communications Expert Certified by BICSI and several Major Hardware Manufacturers. Mr. Grundberg writes on a variety of subjects, and Consults on Major Construction Projects Worldwide and sits on several Codes and Standards Commitees Including the NFPA 72 for Fire Alarms. Mr. Grundberg is also an Active Internet Marketer specializing in Affiliate Products and Programs.

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