Contractor Hiring Guidelines

Here are a few guidelines to follow when you're seeking a construction project manager or contractor to develop a substantial project, be it a residential building or a commercial building.

An essential ingredient is finding a project manager or contractor who can be flexible and innovative. In many cases it's important to do a construction project around an existing building or within an active office or business without disrupting the day-to-day operations. A good project manager can schedule the work at off-hours or devise another way to circumvent the owner's ongoing work schedule.

Review the project manager or contractor's experience to ensure the firm has done your kind of project before. Sometimes a high-rise builder may not be a good choice for an upscale retail shopping center. Likewise, a residential homebuilder may not have the skills to tackle a commercial building.

Take a hard look at whether it might be more economical to negotiate with a contractor/manager for the whole job versus putting various segments out to bid. By negotiating you have the contractor involved from pre-construction through project completion. The contractor gets involved in managing all aspects of the work, including communicating with all subcontractors, overseeing budget and cost control activities, being flexible in work performance and seeing that the owner's objectives are carried out precisely.

The following are some Construction Management techniques used to save Time and Costs when entering into your next construction project contract:

1. If you are requiring a payment and performance bond ask the contractor to have the payment and performance bond invoiced to you at Cost. You'll save a hefty mark-up.

2. Verify General Liability and Workers Compensation insurance certificates from the contractor prior to starting construction. Examine the policies expiration dates and be satisfied with the amount of coverage the policies offer; also insist on getting a copy of the certificate for your file. Otherwise, you may have considerable liability.

3. Request a construction schedule prepared by the contractor incorporating your completion date and your move-in date. Gives real meaning to the completion of your project.

4. Have the contractor provide a sub-contractors list of emergency telephone numbers. Saves time and frustration when instant communication is necessary.

5. Demand a pre-defined extra or deductive work costing breakdown including but not limited to: pre-established unit prices, written approved cost estimate, and a 3-tier basis of actual construction cost plus percentage of overhead and profit. Minimizes disputes and dramatically controls costs.

6. Require a schedule of values itemized to include: General conditions, trade activities, bonds at cost, overhead and profit. An invaluable aid in reviewing payment requests.

7. Persist in a certificate of occupancy by the governing authority prior to contractor receiving final payment. You'll be assured that work has been completed to code.

8. Ask for written confirmation from contractor stating all inspection list (punch list) items are completed. Otherwise, items may be missed and reinspection may be necessary.

9. Request a Conditional Waiver and Release Upon Partial Payment Requests from the prime contractor and sub-contractors filing preliminary lien notices. Your lien exposure will be reduced substantially.

By W. Gary Westernoff, Founder and CEO of Constructionplace.com, Inc. Moraga, CA.