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Choosing a Contractor - Page 3 Print E-mail
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Agreeing on payment:

 

Because of the uniqueness of this project compared to most projects a contractor has, it will be very difficult for him to determine the exact cost to build your dome. Any experienced contractor has, at one time or another, lost money by bidding a job too low. So if he is not confident of what his costs will be, he will tend to overbid. If he does underbid, once construction begins he will see he is losing money and will start to cut corners, do poor quality work, and try to get out of the job before completion.


He may wish to bid your project on a “cost-plus” contract, in which the contractor charges for the expense of his materials and labor plus a percentage for profit. This is detrimental to you because the more he spends, the more he makes. We recommend a modified “cost-plus” arrangement in which the contractor is paid for his cost plus a predetermined dollar amount for profit. To learn more about determining how to pay your Contractor click on Paying Contractor.

 

When to pay:

 

Financial institutions never pay a contractor until each particular phase of work is completed. If you have the responsibility, and not your mortgage company, to pay the contractor, do the same and only pay the contractor in prearranged installments called draws. For example: 10% or $xxx after the foundation is complete, 10% or $xxx after the shell is complete, etc. If he does not have enough capital or credit to see him through a phase of construction, he is not an established businessman.


Never pay ahead for work that has not been done yet. And always withhold final payment until the entire job is finished and you are happy with the results. That is the best insurance you have to make sure he will return and complete the project.


Make yourself familiar with the lien laws for your state. If your contractor or subcontractor does not pay for the materials used in your house, even if you have paid him for those materials, the supplier may be able to place a Mechanic’s Lien upon your property, requiring you to pay them also. To learn more click on Mechanic's Lien.


Contracts:

  1. Be sure everything that is important to you and everything you expect is written into a contract.
  2. We recommend you have a detailed, written understanding of the contractor’s responsibilities, what he is to do, and the items that are to be included. This can be done in an informal manner and can simply be an itemized list of what the contractor agrees to do and when, what you agree to do and when, and how much he will be paid and when.
  3. Include a general statement that all work will be done in a professional manner.
  4. If you have the option, we recommend an agreement which will allow either party some opportunity to back out or renegotiate the remainder of the jobs to be completed. If your contractor really wants out of the job, it is in your best interest to let him go. If you are dissatisfied, this will also provide you with an escape clause. It is not uncommon to change contractors during construction of any home.
  5. To encourage the contractor to complete the project in a timely and cost effective manner, include rewards for finishing early and below the estimated cost.
  6. Include a provision to reduce his profits for significant overruns and delays.
  7. A contract that rewards the contractor for good and productive service is the objective.
  8. Be sure both of you sign and date the contract. Keep a signed copy for yourself in a safe place where it is accessible when you need to refer to it.




 
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