Taking the Mystery Out of Remodeling – by Reva Kussmaul

Keep A Close Eye on the Bottom Line by Carefully Monitoring the Details

If your contractor isn’t making a profit – the job isn’t going to go well because they will feel resentful about not making enough money yet again.  I say yet again because if they’ve under-bid a job once they’ve done it more than once.

1.  Know exactly how much you can spend on your project and make sure the contractor knows exactly how much they need to earn.  How would you know this?  Ask.  Make sure you let them know, “you’re not asking because you want to know how much money they’re making in order to bargain them down” but so you can be sure they’ll finish the job because there IS enough money to do so.  So many nightmares occur because the contractor runs out of money due to under-bidding and under-earning; therefore, they cannot finish the project.  This is the clarity in communication part.  Asking this question is OK!

2. Make sure to debug every job in the set-up phase by making all decisions up front, right down to the final color and type of knobs.  Make sure the products are on order and/or on-site, if possible, before the job begins.  Have a complete materials list at hand, make sure all sub-contractors are lined up and finalize all work orders, bids and contracts with the exception of change orders.  Work with the contractor on these items prior to beginning the project.

3.  Have a pre construction conference with your contractor.  Go over all the procedures and schedules as well as supply lists and find out if the supplier is delivering materials and if not who is?  This saves time and money as well as benefits all parties involved.

4.  Make sure you know exactly how change orders are going to be handled.  It’s easier to know this up front rather than at the time of a change.  Change orders must be written, signed (by both parties) and Okayed before they are begun.  Monies for these changes should be paid as soon as they are completed or in the next progress payment, however, knowing this before the job begins will prevent hassles.  It’s easy to forget or wait until the end of a job but this can create a major nightmare for both parties.

5.  Make sure the payment schedule is clear and concise as far as when money is due.  This way, there is no doubt!  Find out at the beginning of the project who will be collecting the money and when.  If a phase is complete and payment is due – PAY YOUR CONTRACTOR!!  Neither party should allow monies to be held up for any reason if phases are completed in a timely fashion and the payment is scheduled in the contract.

6.  The final payment due should be between $500 – $2,500 and must be paid upon completion of the remodel including touch-ups or punch list items.  Prepare and sign a pre-completion list when the job is 98% complete.  Contractors should be very clear about this initially and homeowners must abide by this on their end.

7.  Neither party should let down their guard from beginning to end.  Remember this is a 50/50 relationship and can be a dream if you simply communicate and stay focused on the purpose – which is a completed, quality project.

THE GOAL IS A WIN/WIN SITUATION:  THE CONTRACTOR GETS ALL MONIES DUE (INCLUDING CHANGE ORDERS) AS WELL AS REFERRALS.  THE HOMEOWNER GETS THE COMPLETED PROJECT AND EXPERIENCE THEY SIGNED UP FOR.

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