With a primary building contractor and up to 40 or so subcontracting trades people, any building project requires careful screening of resources. Since your building contractor will be responsible for the engagement of subcontractors, it is important to choose your building contractor carefully. Once you have done a preliminary review of building candidates, the following screening process will help identify any warning flags.

Bidding Process

The bidding process will tell you a lot about the contractor's work ethic. With the building industry still enjoying massive growth, it is often difficult to find a contractor to supply a bid. Putting together a bid takes a lot of time for the building contractor, so it is not unexpected that during these times most busy contractors will simply suggest you call them back when you are ready to build.

However, successful contractors understand that unless you have the opportunity to go through the due diligence and bid process, you will not likely engage with them in a contract. You expect to get a view of the outcome before putting out $100,000.

Simply, if a contractor will not supply you with a bid, move onto the next one. If they don’t have time for you before construction, chances are they wont feel any different during construction.

Contractors Communication Style

Your contractors communication style can tell a lot about them. Are they interested in answering your questions, or do they tend to be dismissive of your concerns.

Were they willing to provide information about themselves and previous contracts? How well did they complete the Building Contractor Profile. If their response was brief scrawls without effort to present it in a professional manner - chances are your house will be presented in the same manner.

Don’t let contractors bully you – sure contractors know more than you about building but remember that you are employing them, not the other way around. Having a bit of building knowledge and certainly building terms will help stave off a contractors attempt to use their knowledge to get their way.

Empathy With Your Needs

Ask a potential contractor what they feel about the design and materials you plan to use. You want a contractor that enjoys working on your home remodeling project. As you know, if one enjoys their work, they are more likely to do a good job.

Then, ask them to verify their opinions. It may simply be because they personally prefer working with one type of material than another or they have a commercial rebate arrangement with certain suppliers.

If your contractor questions all of your choices, think twice before signing choosing his bid.

Follow Up On References

Always follow up on references – remember, they will only give you references for projects which they know will give you a good impression. I prefer to ask for a list of the last 6 projects they have completed, and make direct contact with the owner.

If the builder shows any reluctance to give references, be wary. Also, be cautious of references from designers – I got caught with this. It eventuated that the designer and builder were friends, and as it turned out both came up lacking in a number of areas.

Ask the builder if there have been any previous disputes with these references – give them a chance to give their side. Frankly, some home owners are just too hard to please and expect constant on the fly changes without consequence.

Concentrate on how well they communicated with the owner and whether the builder constructed to the specification, on time and on budget.

Financial Due Diligence

Your financial due diligence includes not only the contract bid, but also the building contractors financial position.

The financial position of a building contractor may or may not be an indication of their capability. There are no doubt many contractors that have been caught with hefty family medical bills, divorce settlements and child support. If you find that a prospective contractor is running things to the wire, it may be because of these type of personal circumstances, rather than their professional building practices. Don't be afraid to mention to the building contractor that you will be doing credit reference checks and ask them if there is anything they feel comfortable disclosing that may offer explanation for anything you may find.

Check that their position is not due to previous litigation or bad financial management. Use credit agencies - the small fee charged is nothing compared what you will save by being caught out if your builder goes bankrupt in the middle of your project. Make sure you have that lien waver in place!

Deposits

Some builders ask for deposits before they will prepare a bid. Never, ever give a deposit for a bid. However, a deposit up to 15% is common at the start of the project. Never agree to more than this, and if you can, suggest that you will pay the deposit directly to the material suppliers. This way you ensure that your money is being applied to your project and not paying tradesmen for the overrun on the previous project. Asking the builder what credit facility they have with suppliers is a good telltale. Successful builders have credit facilities with suppliers and can get a 30-60 day float for purchases to cover the period until you pay your bill at the progress payment point. Contractors with bad credit cannot. If the Contractor wants a large sum of money up front, it is likely the funds are not being used for your project.

Bid Price

Don’t let price be your guide – it is understandable to be tempted to select the lowest bid. In most cases, though you will end up paying a lot more. Quality works comes at a fair price, not a cheap price. If you want your job completed in an acceptable timeframe and to an acceptable standard, be prepared to pay for a better contractor. They generally attract the better sub-contractors and you get a much better, smoother job done.

Aim to get three bids for any project. This will always give three different prices, sometimes with significant variance. If a contractor is more than 15 percent higher or lower than another, ask him why. He may have included more or less in his bid than the others. You have the right to ask questions about the bid.

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