Real Estate

3 Important Questions to Ask Before Hiring a Contractor

Hiring a professional contractor to carry out a particular area of work, to a specified and agreed standard, and for a specified cost, can be routine or full of issues.

To protect the one who is doing the actual hiring, there are a number of particular protocols that need to be addressed fully and competently first, such as official permits, general contractor insurance, and all associated costs.

In reality, there are more than these requisite questions that need to be explored prior to any hiring.

But these factors (which, in themselves, will lead to the hirer asking a number of questions that pertain to each) are, by far, the most important that need to be covered before the hired contractor begins the task if chosen by the hiree.

These are the most important questions that need to be answered:

  • The Contractor Business Question
  • The Legalities Question
  • The Finance Question

Remember, a significant project may cost thousands of dollars. The diligence used now may well save considerable time, money, and annoyance.

This article will cover all of these questions in full, and provide examples of the pertinent things to ask by those doing the hiring for each.

1. The Contractor Business Question

Being confident in the knowledge that a contractor has a sound, reputable business (providing quality workmanship at reasonable prices) is half the battle in ensuring the hirer’s designated project runs smoothly.

By asking the potential contractor the following questions, the hirer can ascertain that they meet these criteria:

  • How long has the contractor been in business? In general, the more experienced the contractor, the more likely that keeping to schedules and budgets is their general business practice.

    Additionally, they will have experienced common construction site problems that may come up, and know-how to resolve these.
  • Does the contractor have contactable references for previous projects? It is imperative that the hirer is able to contact previous clients and receive quality references before hiring any contractor.

    Such clients can provide important feedback, e.g. standard of work, keeping to schedules, attendance on-site, cost-effectiveness, and that proposed cost increases during the work were valid and necessary.

    If no references/contactable clients are not provided, the potential contractor should not be chosen.
  • If the contractor is local, how long have they been working in the area? Local contractors have to carry out quality work to stay in business in the area. There is no better advertising than simple “word-of-mouth.”

    If a potential contractor has been working in the area for several years, and they are able to provide local references, it should be considered a valuable plus, but not a confirmation of hiring.
  • What are the contractor’s specific contact details? This is essential for normal hirer-contractor business communication.

    The contractor should provide a physical business address (and definitely not just a P.O. Box number), as well as business and cell phone numbers.

    Failure to provide a physical business address should be considered a significant warning sign, as the hirer may need to contact the contractor several years down the line.

Should any potential contractor satisfactorily meet these criteria regarding their business, the hirer can now move onto the question of legalities.

2. The Legalities Question

  • Is the contractor licensed? Contractor licensing will vary from state to state, it is the individual state that sets the relevant requirements.

    Contractors will typically be asked to pass an exam to obtain a license from the appropriate state board, and they are then required to attain a certain number of continuing credits each year, which primarily focuses on current building codes and business practices.

Often, states will have a state agency (like a registrar), which allows anyone wishing to hire a contractor to be able to verify their license or credentials.

Failure to do this (with the contractor not having the right license) can result in local government officials shutting down any current projects they are working on.

  • What is their license number? Having this information means the hirer can verify the contractor’s license number with the state agency responsible.

    It also allows the hirer to verify whether or not any claims or judgments have been passed against this particular contractor, and if they have owned another contractor business under a different name.
  • Is the contractor bonded? A surety bond provides liability protection for the hirer in the event the contractor either defaults or doesn’t finish the project satisfactorily. In fact, some states require contractors to have bonding before they can receive or renew their licenses.
  • Is the contractor fully insured? Important: This is different from a bond. Any contractor should, as a minimum, have general contractor insurance.

    This is also sometimes referred to as general liability insurance, business liability insurance, and commercial liability insurance. If the contractor does not have this insurance, do not hire them under any circumstances.
  • Will the contractor employ subcontractors on the project? Many contractors will rely on subcontractors to complete a particular project. This is quite normal; however, the hirer should ensure the subcontractors are legit, and that they also have insurance.
  • Is the contractor able to put every detail about their project proposal in writing? The hirer should have a formal meeting with the eventually preferred contractor to go over all aspects of the project before signing a contract, and the chosen contractor should agree to this request.

Should any potential contractor satisfactorily meet these criteria regarding the legal side of their business, the hirer can now move onto the question of finance.

3. The Finance Question

  • What is the predicted timescale for such a project? Construction schedules can, and normally do, change during a project. The hirer should request a rough estimate of the length of the timescale.

    Additionally, it is advisable to get the contractor to set completion points (or milestones) for various aspects of the project. By doing this, the hirer will be more confident in the proposed cost for the project.
  • How will payments be handled? Ideally, it is preferential to pay for work throughout the project, and only making payments after the contractor achieves pre-agreed milestones.

    Should the contractor start falling behind the agreed timescale, the hirer has covered themselves financially.
  • What’s the proposed project cost? All costs associated with the project should be agreed in writing. Any estimates should be as detailed as possible.

    Hirers should be wary of any quote that is significantly lower than others; for example, it may not include all the necessary materials and labor.

In regard to selecting the contractor, the hirer should put all of the above questions to at least 3 potential contractors.

This is so you can select the most appropriate one for the project, having taken all the previous advice into consideration, and remembering the old adage: The cheapest is not necessarily the best.