Working with contractors - Posted by Ron (MD)
Posted by Ron (MD) on November 14, 2000 at 22:04:50:
Your main question related to materials. I rehab about one house per month, sometimes two. I want no part of the purchase of materials. I have had a few unusual situations where a less-than-solvent contractor was doing a small job for me on a trial basis. He had no money and, since he was new for me, I didn’t trust him with too much money up front. I was paying for materials directly. I very quickly learned to hate Home Depot. At first, I would meet him there about an hour after he was supposed to get there to collect his materials. Well, contractors never get anywhere on time and I found myself hanging around Home Depot waiting for him to finish, then waiting in line to pay. A colossal waste of time.
With the next guy, the deal was he had to pick out all the materials and take them in a cart to the service desk. The service desk then rang them up and called me for my credit card number. An improvement over the first situation, but still a pain.
I currently use three different contractors (none of them works exclusively for me). Here’s how I handle materials. My scopes of work are very detailed. They typically run five pages, single spaced. My instructions are very specific. As for materials, I include with each scope of work my “standard list of materials”. It is one page, single spaced. It isn’t a shopping list for a particular job, it’s a list of the materials I want used for specific applications. For example, it gives the Home Depot SKU and price for each door I want used (i.e., front, rear, basement, and interior), each light fixture (i.e., kitchen, dining room, bedroom, exterior front, etc.), the floor tiles (bathroom and kitchen), the bathroom fixtures (toilet, vanity, medicine cabinet, tub surround, etc.). You get the idea.
This material list (and the detailed scope of work) serves two important functions. It is very helpful for the contractor to price one of my jobs – he doesn’t have to guess how much, for example, my dining room chandelier will cost. Secondly, it provides clear, specific guidance for them during the course of the job.
My contractors are responsible for every aspect of the rehab (including materials) except for carpet, HVAC, electric service panel, and roof. The scope of work specifically states that I expect them to hold to the agreed contract price unless there is a major surprise. I make clear (in writing) that minor problems along the way will simply be handled, with no additional nickel & dime charges along the way. I’d say that 80% of my jobs come in on budget. The other 20% may be over budget by 5-10% when a significant problem rears its ugly head.
I do not want to be in the position of scrutinizing their receipts from Home Depot before I reimburse them. I don’t want to be wondering if I’m paying for 5 buckets of paint but they’re only using 4 on my job. With my three regular contractors, I will typically advance them about $2k on a $12k job, so they are not out of pocket for material. I then give them $2-$3k per week draws as long as the job is moving along. I don’t have a written draw schedule. They have to make a payroll each Friday and I’m not smart enough to design a draw schedule that breaks a job down into four neat one-week segments.
Once you find a contractor (or two or three) that works well for you, this is all much easier. Getting to that point can be a real challenge.