How to Find and Hire a Contractor

The selection of a contractor is the single most important part of your project.  Whether you’re remodeling a kitchen, building an addition to your home, or undertaking a complete gut-to-the-studs remodel, the contractor is the one who is going to fulfill your expectations – or not.

 

The first question to ask yourself is; are you going to be working with an architect?  (More on that here.)  If so, then the selection of a contractor is a joint effort between the two of you and the architect can be your guide.  Just remember that the final decision is up to you.  Even if your architect has a contractor he frequently works with, insist on interviewing and bidding at least two more and doing your due diligence as described below to make sure you’re comfortable with your architect’s choice.  NEVER blindly accept your architect’s contractor.

 

Another option is to work with a design-build firm.  For more on that, read this.

 

If you’re not working with an architect or a design-build firm, then it’s all up to you.  Don’t rush it.  Don’t hire the first person you find.  Expect to take your time and interview as many contractors as possible until you feel like an expert in your own right.  You need to be completely comfortable and confident with your final choice.  The worst thing you can do is put yourself in a position where you’re going to have to hire a second contractor to finish the job – or fix the first one’s mistakes.

 

I think of the process in three phases – 1) initial screening, 2) due-diligence, and 3) final negotiations.  Here’s how to proceed:

 

Phase 1 – Screening

1.  Collect referrals.  Cast a wide net.  Talk to as many friends and relatives in your area that you can find and ask them who they know.  Better yet, canvass your neighborhood.  If anyone has had work done that you like, find out who did it.  It’s an added plus to have a contractor who commonly works in your neighborhood and knows the particular quirks of the area.  Try to get at least five or six candidates – I started with as many as ten for my first project.  Do not waste your time looking in the phone book or responding to flyers tucked in your mailbox. 

 

2.  Meet face-to-face.  Your contractor is going to be your partner – a member of your family for many months.  It’s important to work with someone you like and can communicate with.  Do they respond to an invitation to meet?  You’d be surprised how many contractors don’t even return a phone call.  How promptly do they respond?  It’s important that they be readily available and responsive when you need them.  Do they come prepared for the meeting?  Don’t tell them what to bring – see if they adequately prepare on their own.  A good, professional, business-like contractor will bring photos of other jobs they’ve done, sample contracts and invoices, and a list of references.  I’ve had some even give a Powerpoint presentation.

 

3.  Let him/her talk first.  In your first meeting, resist the urge to do all the talking or to show off your home.  Let the contractor start the meeting.  You’ll learn more by seeing how he/she fills the awkward silence.  Save your questions till the end after you see what information they volunteer.

 

4.  Be prepared with your list of questions.  And take lots of notes.  Go into the meeting knowing exactly what you want to know before the meeting ends.  Make yourself a checklist and use it for every interview so you can compare apples-to-apples when you’re making your final selection.  Then, whatever they don’t answer on their own, you can start asking the right questions.  These should include:

  • Are they licensed and bonded? 
  • How long have they been in business?
  • How many employees do they have?  Some contractors may work alone, some might head a big company.  One’s not necessarily better than another but be aware that if you work with a one-man-band, what happens if he gets sick or has an emergency?
  • What’s the biggest job they’ve ever done?  What’s the smallest?  What kind of projects do they do most often?  See where your project falls in their field of experience.
  • Who are their subcontractors?  Even the largest contractors sub-contract specialty work like plumbing, electrical, concrete, etc. and a contractor is only as good as his subs.  How long have they worked with each of them and how deep is the relationship?  How much control will you have over their subs (if you want any).  What is their bidding process when working with subs.  Will you be able to bring in your own subs (if you know any). 
  • How many jobs do they typically carry at the same time?  How many other jobs will they have while they work on your project?  Will you be their only job or will you be competing for their attention with other projects?  A large contractor with other jobs will be more likely to be financially stable than a lone operator who’s always cash-strapped – just be sure they have a team dedicated to your project so you will feel like their only – or most important – client. 
  • Ask them to describe their best and worst experiences.  What has made particular projects more successful than others?  How have they resolved differences with difficult clients?
  • How long do they estimate your project will take?  How do they stick to a schedule?  What’s their track record of finishing on time or finishing late?  What issues might they encounter on your project that could cause delays?
  • What does their typical contract look like?  Do they prefer to work on a fixed-price or cost-plus basis?  How flexible are they if you want to buy some materials like appliances and fixtures directly to save money?  (More on that here.)
  • How do they bill?  What does their typical invoice look like?  How much detail and back-up do they provide?  How quickly do they expect you to turn around payment?

5.  Set your own rules.  Regardless of their preferences, they need to accommodate how you want to work.  What kind of contract do you want – fixed price or cost-plus?  How do you want to be billed and how often?  How long do you need to turn around payment?  What kind of back-up and detail do you want to see on your invoices?  The right contractor for your job will be flexible enough to meet your needs – or provide a convincing explanation for why they prefer to work their way.

 

6.  Now discuss your specific job.  After you’ve learned everything about the candidate, then show them your house and discuss what you want done.  Be general – leave details open-ended – see what information they ask for or what suggestions they have.  A good contractor won’t be afraid to suggest alternatives you might not have thought about, or point out problems or issues such as supporting walls, space utilization or potential permit issues.

 

7.  Get references.  References are paramount and any decent contractor should come prepared with names and phone numbers – or promise to get back to you quickly with them.  Get at least three client references – but also ask to talk to two or three sub-contractors or suppliers in addition to clients.

 

8.  End the meeting.  Thank them and send them on their way.  See what kind of follow-up they do.  See if they call to thank you for the meeting and propose next steps.  See how quickly they get back to you with promised follow-up information like references or a sample contract.  See how eager they are to earn your work.

 

Phase 2 – Due Diligence

1.  Call their references.  They should have prepped their clients to expect your call so don’t be shy.  Ask them how satisfied they are and if they would work with the same contractor again.  Ask them if the contractor met their expectations.  Most importantly, ask them to describe a conflict or disagreement and how they worked through it.  Nobody is perfect and your job is going to be stressful.  Working through your differences will strengthen your relationship.

 

2.  Arrange to meet again – but at their office this time.  See how established they are.  See how they run their business.  See how busy they are.  Meet their team.  Talk about the results of your reference calls and any new questions that have arisen.

 

3.  Ask for site inspections.  Ask each candidate to take you to at least two, if not three client’s homes and show you their work first-hand.  They should have a good enough relationship with past clients to be able to set this up.  If not – that’s a huge red-flag and stop right there.  A satisfied client should be more than happy and proud to show off their home.  My contractor is always parading prospective new clients through my projects and I’m more than happy to oblige.

 

Phase 3 – Contract Negotiation

By now you should have narrowed it down to two or three finalists.  Don’t dismiss anyone until you’ve signed contracts with your first choice – you never know for sure till the ink is dry and going to your back-up after you’ve dismissed him puts him in a stronger negotiating position. 

 

There’s so much involved in negotiating a contract that I’ve saved it for a separate posting.  Look for it here.  But in summary:

  • Decide how you want to work and be firm.  With everything you’ve learned up to now, you’ll know if you want a fixed-price or cost-plus contract.  (More on that here.) 
  • How do you want to be billed?  How much back-up do you want to see?
  • How amenable is he/she to letting you save money by buying appliances and materials yourself?  Or subbing parts of the job yourself?  This gets complicated so I’ll address it in a separate posting.
  • What kind of assurances can you build-in to the contract for them to stay on schedule?  Again, more on this later.

This is a lot of information but there’s a lot involved in hiring a contractor.  Stay tuned for a separate posting about negotiating your contract and feel free to contact me through this blog with any questions.  I’m here to help.

  

 

Architects! Who Needs ‘Em?

You do.  If you want superior results and the best return on your investment.

 

Architects are kinda like prostitutes.  They perform a service we could do by ourselves, if absolutely necessary, but the process goes a little more smoothly, and the results are far more satisfying with the aid of a professional.

 

Almost anyone with an ounce of taste and good sense can execute a remodel without an architect.  And for your average run-of-the-mill middle-market or down-market flip or rental property, that may be all you need – a slap of paint, whatever tile you can get on sale, some inexpensive fixtures from Home Depot and voila!  Job done. 

 

For more extensive remodels (moving walls, building additions, etc.) a good contractor can get your ideas drawn-up and signed-off by an engineer.  Some contractors consider themselves amateur designers or (unlicensed) architects – and some of them are pretty adequate at meeting the needs of their clients.  But if you’re dealing in the luxury market, or even want to get top-dollar for an ordinary house, get yourself a pro.

 

Design Integrity

Designer showcase houses where every room is done by a different designer may be fun to look at, but would you really want to live in it?  A good house calms the spirit and lifts the soul.  A poorly designed home creates visual chaos and subliminal stress.  Think about houses you’ve been in that please you versus those that confuse you.  Room flow, sight-lines, massing and proportion are vital – but they’re only the foundation.  The finishes, the hardware, the lighting, the colors and textures – they can make or break an otherwise good house.  It’s what I call “design integrity” and what one of my architects calls the “language” of the house. 

 

Here are some basic rules of design I’ve learned from working with architects:

1.  Be consistent with finishes:  Carrying the same cabinetry finishes and countertops throughout the kitchen and baths makes the house feel larger, calmer, and more “designed”.  Some designers even believe in using the same tile throughout all the bathrooms, but I sometimes like to vary tile color or shape to give a powder room or guest bath a different attitude than a master bath, while staying within the same family (glass, stone, ceramic, etc.)  When done right, this doesn’t result in a bland house, but in a house with a strong visual presence.

 

2.  Be consistent with your hardware and fixtures:  Doorknobs and drawer-pulls are called the “jewelry” of a house.  Like jewelry on a beautiful woman, it should all work together.  A well-dressed woman wouldn’t mix gold and silver jewelry and neither should your house.  Whether it’s polished chrome, satin nickel or oil-rubbed bronze, pick one finish and carry it throughout the house – everywhere – including window and door hardware, cabinetry knobs and drawer-pulls, plumbing fixtures, everything.  Mixing and matching confuses the observer and creates subliminal stress. 

 

3.  Be consistent with flooring:  A different floor in each room adds to the visual chaos and breaks up the spaces into separate smaller spaces.  Whether you’re using hardwood or tile, carry it through everywhere you have a solid floor surface and the house will feel more expansive.  When you do alter the flooring, use it to define different spaces – carpet in the bedroom or tile in an entry foyer, for example.  But try to limit it to no more than two or three flooring materials for your house and carry them throughout.  Using tile, slate or concrete indoors and continuing it out to a patio brings the outdoors in.  And blurring the line between indoors and out is what mid-century modern design is all about.

 

4.  It’s not just visual, it’s tactile.  Think about the things you touch most often in a house – doorknobs, drawer-pulls, faucets, etc.  These things should feel solid and rich and work with precision, this is not the area to go cheap to save money.  Think of the sound you get when you shut the door of a Bentley versus a Yugo.  You want your house to be the Bentley.

 

A good architect is certain to do a better job of this than you could do on your own.  The benefits may seem intangible but I assure you this will add real value by creating a house that stands apart from the rest.  And if done correctly, the added cost of engaging an architect will more than pay for itself in substantially higher returns. 

 

Remember, you are creating a product with lots of competition and it’s your job as the owner/builder (or “flipper”) to create a house with a competitive edge that people will remember – whether it’s in Beverly Hills or Compton. 

 

Read about how to find and hire a contractor here.  And look for other postings here about design and how to find, hire, and negotiate a contract with an architect as well as the option of working with a “design-build firm”.

Clearing a Difficult Permit – How To Survive the City Planning Department

The first thing you have to understand in dealing with the city is that the Planning Department is a vast conspiracy out to make the process as confusing as possible.  Inspectors put in their ten or twenty years toying with our emotions and testing our patience with the sole objective of guaranteeing themselves a second, far more lucrative career in retirement as consultants, helping us navigate the Kafkaesque labyrinth that they, themselves, created.  A trip to the Planning Department makes the DMV look as efficient as the German railroad.

 

Normally you wouldn’t have to put yourself through this agony – it’s your architect’s or contractor’s job.  But if you’re “G.C.ing” the job yourself (serving as your own designer and general contractor), then this is one of the prices you’ll have to pay. 

 

There is another reason you might find yourself going to the Planning Department.  If your job is complicated and your architect and/or contractor  – or even a hired consultant – is hitting a snag, it can be beneficial for the homeowner to try and do it.  The clerks at the planning department can be competitive and cranky with professionals who they know don’t have a personal stake in the endless run-around.  And they all have a shared financial stake in perpetuating the system.  But when confronted with an actual homeowner who, as a taxpayer, is directly paying their salary, they tend to be far more deferential and helpful.

Actual photo of the City Planning Department

Actual photo of the City Planning Department

 
If you find yourself in the unfortunate position of going to the Planning Department yourself to push along a sticky permit (also known as the tenth circle of Hell), here are ten important tips:
 
 

 

1.  Go alone.  Letting them see you getting coached from your architect or contractor waiting in the wings will appear manipulative.  If your architect or contractor does go with you, have them wait out-of-sight in the cafeteria.

 

2.  Play dumb.  Be helpless.  You don’t know anything.  You’re just a know-nothing homeowner, not a professional in the home building or renovation business.  You have no pre-conceived notions as to how the process works, you’re just a citizen bumbling your way through it.  The less you know, the more helpful they’ll be.

 

I know nutink!

I know nutink!

3.  Give as little information as possible.  Do not volunteer any information that is not asked in that specific encounter.  If you know why there’s a problem, do not bring it up.  You know nothing.  See if this clerk catches it himself.  If they don’t, you may glide through without a problem.  And if they do catch it, act surprised – even bewildered – and they may find a work-around right there on the spot.

 

4.  Be nice!  Be nicer than you’ve ever been in your life.  Nice, polite, patronizing and empathetic.  The first time I tried to handle a problem permit myself, I stormed in with my contractor in tow, pounding my fists on the counter, demanding to see someone in charge and refusing to leave until I got my way.  Believe it or not – this didn’t work!  The planning supervisor simply dug his heels in deeper (and threatened to call the police to have me carried out.)  I’ve had much greater success channeling Mr. Rogers and being as sweet as a box of chocolates.  While waiting for your number to be called, watch the clerks at the counter and wait for the nicest one.  Once approaching the desk, compliment him or her on how smart and efficient they seem compared to their colleagues.  Better yet, say that everyone told you to see them, specifically, because they have the reputation as being the best at what they do.  Then listen caringly as they complain to you about their co-workers.  Compliment them on their tie, earrings, hair, whatever.  If you overheard them talking to a colleague about their recent vacation, then tell them how rested and refreshed they look – did they just return from vacation?  If you see pictures of children on their desk, gush about how they are the most beautiful children you’ve ever seen in your life.  I think you get the idea.
 
5.  Listen.  And care.  I’ve sat for nearly an hour listening sympathetically to a clerk talk about her sciatica, her no-good ex fiancé, and her recent vacation before we ever got to the business at hand.  By the time we did, we were not only best friends but kindred souls.  She became my advocate throughout the rest of the process.  I expect we’ll be exchanging Christmas cards this year.
 

 

 

6.  Be patient.  Even if you’ve followed my advice so far, this could still be a lengthy endeavor.  You can either be miserable or you can make a game of it and have fun.  Clear your calendar for a couple weeks ahead.  Pretend you’re on a scavenger hunt.  Clap your hands with glee and say “oh goodie!” with every new hurdle they put in your way.  I’ve spent weeks, six-seven hours a day filing a case.  With a case file as thick as a stack of New York City phone books, every day my clerk would find one more thing that was needed.  Then every time she reviewed it with her supervisor, he’d find reasons to have me re-write everything again.  But you are there to do whatever it takes for your case to sail through smoothly without getting kicked-back with comments or modifications – so welcome every new wrinkle.

 

7.  Be respectful.  Try to pretend you’re NOT dealing with Patty and Selma from the Simpsons and that you are dealing with a smart, capable person who will become your newest most cherished best friend.  These clerks do not get any respect from anyone else, so showing them the littlest amount will go a long way.

 

8.  Know that there’s no single solution to your problem.  You will get a different answer from everyone you ask – be they permit consultants or even Planning Department staff members.  I once had a case that turned from a simple over-the-counter permit to an 8-month variance to a 6-week “zoning adjustment”.  Go figure.

 

9.  Go early!  Get there in the morning – between 8 and 10AM is best while they day is fresh and planners are in a good mood.  By 11 they’re thinking about lunch so they don’t want to deal with any difficult cases that might take too long, and by afternoon, they’ve had their fill of angry applicants and difficult cases so they’re tired and cranky.

 

10.  Did I mention be nice?  If you’re like me, it will take every ounce of will-power you have not to have a complete meltdown.  I can’t say I’ve always succeeded in avoiding that.  Run out of the building and find a private place to scream at the top of your lungs, if you need to.  Just don’t unleash on the dimwits behind the counter.  (Oops!  Did I say that out loud?)

 

Read all about working with a permit expediter here.

 

What you want to build

What you want to build

 
What the city will approve

What the city will approve

What Is a Permit Expediter and Do I Need One?

The permit process can be pretty straightforward if you’re doing a simple remodel.  But try to do anything out of the ordinary (like everything I do), and it can be a frustrating, time-consuming, and expensive proposition.  The city Planning Department is a fun-house hall of mirrors and the people who work there like it that way.

 

The Planning Department is a vast conspiracy whose primary mission is to make the process as confusing as possible in order to guarantee every retiring staff member a lucrative second career as permit consultants where they make more money than they ever could have working behind a counter.

 

These consultants are often called “expediters”, but that term is misleading and often misused.  The only people who can really expedite a permit process are one of the downtown law firms who hire former planning department staff members and even retired city council members and charge fees starting at $50,000 and up.  These expediters are hired by large developers or superrich celebrities trying to get around the rules with as little fuss as possible.

 

For the rest of us mere mortals, there are a variety of consultants who can help us navigate the system with as few mistakes and delays as possible.  Only by avoiding delays are they “expediting” anything.  They cannot circumvent the process or make anything move faster.  The most they can do is ensure that an eight-month process actually takes eight months – not ten.  But these consultants aren’t cheap either and usually won’t touch a project unless they can charge at least $10-20,000 in fees.

 

What many people call “expediters” are what I call “runners” or “bag-carriers”.  For $40-50 per hour, they will carry your plans through Plan Check and other planning counters.  Some of them will help you research and prepare your case – others won’t.  Some others only do the research, not the trafficking.  You’ll see these runners around the planning office, often pulling file crates on wheels loaded-up with plans and paperwork for multiple clients.  I’ve seen two types: 1) older men and women who recently retired from the Planning Departments and are still on close terms with everyone behind the counter, and 2) young, leggy women who wear the highest heels, the shortest skirts and the lowest-cut blouses you’ve ever seen and know how to flirt.  In both cases, you’ll see them wave and blow kisses to everyone as they enter the floor.  They’ll stop and chat with everyone they see and spend more time talking with staff members about family, vacations and office gossip than they do conducting business.  All this while you sit seething, waiting for your number to be called, feeling like the outcast at a party where everyone else knows each other.

 

So back to you – do you need a runner, a permit consultant or an actual expediter?  It depends on how complicated your permit issues are and what your budget can afford.  You don’t need any of these if your project is fairly simple and your architect or contractor doesn’t hit any snags.  But if you do encounter a problem, it’s going to be up to you which strategy to pursue since you’re the one paying the bills.  In separate postings I’ll talk about how to find the help you need, and how to handle the process yourself.  Or contact me directly through this site and I’ll see if I can steer you in the right direction.

 

Read more about clearing a difficult permit here.

What is a Design-Build Firm and Should You Work With One?

There are architects, and there are contractors – two separate functions that must work in synergy with each other, and who must also serve as checks and balances against each other.  It seems to make sense to combine both functions under one roof – and this is popularly referred to as a “design-build firm”.  So why wouldn’t you simplify your life and work with one?

 

Conventional wisdom dictates that you should always work with a separate architect and contractor, the reason being that the architect works as the client-advocate overseeing the contractor.  The assumption is that contractors are as trustworthy as mechanics and used car salesmen and will take every opportunity to gouge the customer.  And there’s enough anecdotal evidence out there to justify this stereotype.  After all, construction is a mystery to most people and you have little choice but to believe whatever your contractor tells you.  So with a design-build firm, the assumption is nobody’s looking out for you – therefore, design-build firms inherently pose a conflict of interest.  There’s even some debate as to whether they are ethical – or even legal.

 

Having worked both ways, here’s my take on the matter.  In theory, the architect-as-client-advocate sounds great, but from my experience, few architects are effective in that role.  Architects are artistes and ego driven.  They want their vision built no matter what.  They are often ignorant – and sometimes completely oblivious – to cost of materials and labor.  When I’ve worked with separate architects and contractors, nobody was my advocate.  I had to maintain tight control over the budgets and often mediate spats between the two parties.  Each came to me complaining about the other and they resisted direct contact at all costs.  I rationalized this as “healthy tension” that I believed was benefiting the project, but I can assure you it also created its share of problems.

 

In contrast, working with a single design-build firm was a bit easier, but posed its own set of challenges.  With the architect and contractor partners in their own business, they have a shared interest in benefiting themselves.  Nobody was looking out for my best interests and I had to be even more vigilant, exercising even more control over the budgets, questioning every dollar spent, and second-guessing every recommendation.  Differences between the architect and contractor were settled at their office, not in front of me, and didn’t require me to serve as referee.  Architect and contractor spoke with a single voice and a shared vision, and that made my life a whole lot easier.  But it brings us to the trust factor.

 

It helps that I’ve had a long relationship with my design-build firm, having used them as contractors before.  They have earned my trust, I know how they work and what to expect of them.  We’ve become friends outside work, attending each other’s weddings and children’s birthdays.  They’ve built their company on the work I’ve given them so I know my jobs will always take priority over their other clients.  I know they would never jeopardize our relationship.  I would not have been so confident working with a design-build firm I didn’t know as well.

 

There’s also the budget consideration.  Don’t forget that the architect and contractor each take a percentage of the overall construction budget which could be as much as 20% to each party.  Working with a single design-build firm makes it easier to negotiate a package deal at a much lower percentage.

 

The bottom line – there’s no clear-cut answer.  It depends on you, your situation, your knowledge level and your confidence in undertaking a major project.  If you’re uncertain, I’d suggest starting with an architect you like and trust and letting him/her guide you in your search for a separate contractor.  But if you know what you’re doing and intend to be heavily involved in the day-to-day process and don’t feel a need for an advocate, then a design-build firm may be the best way to go, as long as you know the benefits and pitfalls.

 

In separate postings, I will talk about how to find and hire a contractor and the value of working with an architect.

Bad Design is Bad Economics

  

You’ll see me harp a lot about design issues in a blog about real estate flipping, but design is what makes or breaks a house when you’re selling it.

 

This may strike you as obvious, as it does me, but it’s not obvious to everyone.  The wide proliferation of ugly spec houses throughout L.A. attests to that.

 

I know a team of developers who once showed me a high-end multi-million dollar house they were flipping in the Hollywood Hills.  They bragged to me about the deals they got on materials and how they bought overstocked flooring, doors, hardware, vanities and fixtures at huge discounts off Craigslist and eBay.  There was hardwood flooring of one color in the sunken living room, another kind of wood on the stairs to the dining area which had cheap-looking engineered flooring of another color.  There were at least six different kinds of doors in the house – solid flush wood stained, solid flush wood painted, doors with clear glass panels, doors with frosted glass panels, louvered closet doors and mirrored closet doors.  There was different door hardware in every room – some knobs, some levers, some chrome, some brass.  There were even windows of aluminum, black anodized, and white vinyl clad.  Outside they had aluminum railings, white light fixtures and a faux gold-leaf door.  And some of their ideas were just plain asking for trouble – a faux-concrete finish over drywall in a shower?  A large wood-framed window in another shower?  Both disasters waiting to happen.  The place was a mess.  It looked like the showroom at a bad Expo Design Center.  Think I’m exaggerating?  I’m not.  And these guys were both real estate agents who thought they knew their market.  What they didn’t know was anything about design or the value of working with an architect. 

 

The end result?  Their house sat on the market for almost a year with repeated price reductions and eventually sold at a loss for about $450 per square foot.  My smaller house directly across the street sold in 60 days with multiple offers at $1,200 per square foot.  Those guys ended up hiring my architect for their next project.

 

See other postings here about why you should work with an architecthow to find, hire and negotiate with a contractor and the option of working with a design-build firm.

Hiring a Contractor – Fixed-Price or Cost-Plus?

There are two types of contracts when working with a contractor – “cost-plus” or “fixed-price”.  Under cost-plus, you pay the contractor for the cost of materials and labor plus a commission to cover his compensation – typically 20% but it can range anywhere from less than 10% to over 25%.  Of course both parties work to a pre-determined budget so you have a pretty good idea of what the total job will cost.  With a fixed-price contract, you pay a set amount and it’s up to the contractor to make it work – if he’s over budget, it comes out of his pocket and the more money he saves, the more he makes – you pay the same either way.

 

A recent article in the Los Angeles Times Sunday Real Estate section [“Digging – It’s Your Job” 7/13/08] suggested always negotiating a “fixed-price” contract, never a “cost-plus”.  Their reasoning was that it left it up to the contractor to lose money or turn a profit.  I couldn’t disagree more.  What contractor is going to choose to lose money?

 

I always work on a cost-plus basis and here’s why.  I want to know what I’m paying for, and I want control over my budget.  The estimated cost of the project is just that – an estimate.  Every job is full of surprises and budgets need to be flexible.  You never know what you’re going to find when you’re opening walls or removing flooring.  No contractor is going to want to lose money and with a fixed-price contract, he’ll do everything possible to cut corners including using inferior materials or skipping important steps to maximize his profit.

 

If you want to know exactly what you’re paying for what, negotiate a cost-plus contract within a set budget and insist on detailed invoices with back-up.  My contractor’s invoices generally have up to five or more pages of Excel spreadsheet showing over 200 or more line items detailing what’s being billed against the original estimate.  Changes to the original estimate are discussed in advance, solutions worked out between us and billed separately as a change order.

 

The only time I might make an exception and opt for a fixed-price contract would be for a small job like a closet make-over, a bathroom remodel or maybe even a kitchen – but never for a major house remodel.

To learn more about finding and hiring a contractor and why to work with an architect, read “How to Find and Hire a Contractor” and “Architects!  Who Needs ‘Em?” here.