You may have heard stories about contractors who operate without a license, insurance, ethics or
skill. They are famous for disappearing in the middle of a job, leaving unpaid bills, botched work,
and other misery in their wake. Adding on to your house or remodeling a space can be disruptive and
expensive, but it doesn't have to involve fear and loathing. A successful relationship with a home
improvement contractor is possible, despite the many grim stories. The important thing is to do your
homework. The perfect contractor for your project should be hard to find. His or her past clients
will not be telling all the world about their discovery of a talented, honest, neat, reliable,
available and reasonable builder. They know that too much promotion may affect the available and
reasonable factors when the time is right for the next home improvement. Somehow, though, the word
A good contractor builds a reputation by creating beautiful projects while keeping the clients happy
and healthy. This is a good trick, but a few are able to do it. The main marketing plan for these
contractors is usually word-of-mouth. It is always less expensive than word-of-yellow-pages, and yet
this method can keep the business calendar filled.
While a solid track record will result in job referrals, the contractor must also have good
communication skills to sell his or her services to each new client. I've met a few who get around
this by working for one or two wealthy people who keep them busy for years. The rest have to go out
to meet new people, communicate skillfully, then evaluate and estimate their projects. On top of
their other fine qualities they need to have good business sense, and know how to show up and
complete the work on time.
Good contractors want to avoid situations where the customer has little idea of what they want and
what it might cost to build. They enjoy working for people who are organized and have done their
homework. Preplanning can involve an accumulation of shelter magazine photographs and sketches of
floor plan alternatives. This might be enough to get started with a design and build contractor. If,
however, you are asking someone for cost estimates and a timeline for a remodel or addition, then a
more developed plan is needed. Employing the services of a design professional is an excellent way
to discover the best solutions for your needs, and to be sure that every detail is carefully
One of the most important elements of your research is to establish a realistic budget for the
project. A good way to find out about cost is to ask around and find examples of successful home
improvements which are similar to your plans. Most homeowners are pleased to give a brief tour if
you call and explain your need for information. Visiting several completed projects gives you
experience with how different levels of quality and the scope of a project will influence the
budget. Cost per square foot can range from $100 to more than $300* depending on what sort of space
is being built and what fixtures, appliances, surfaces and details are included.
There are several varieties of contract agreements. Many contractors and homeowners are comfortable
with a fixed-bid which requires the contractor to make careful estimation of all of the costs, and
accept possible losses if things don't go as smoothly as expected. Experienced contractors will
often protect themselves from some of the risk by adding a safety margin to the bid amount. Some
contractors may add a substantial "mark-up" to the cost of materials and labor. This can result in a
windfall when a customer picks expensive fixtures and fittings.
Unforeseeable problems and hidden conditions often appear during remodeling projects. They can be
solved without great difficulty if the contract is clear about who will bear the responsibility, and
how additional labor and material costs will be calculated.
Customers often add to a project or change a few details after the work has started. The original
contract is amended through change orders. It is essential that these changes are documented and
signed by both parties, since they often add significantly to the final cost. The contractor and
client need to meet frequently to sort out problems, make decisions, and have a budget review. If
you have been careful in your selection of a contractor, and have been diligent in all other
preparations, these meetings can be low stress opportunities for sharing information.
Another arrangement is for payments to the contractor to be based on cost plus a fixed fee to cover
overhead and profit. The costs are the amounts actually paid out for materials and labor. In
addition, the contractor will record and bill at a contracted rate for the hours spent ordering and
acquiring parts, supervising labor, working on elements of the job, and meeting with the client.
Overhead expenses are those that the contractor incurs as a result of being in business. These
should be listed in detail, and an appropriate fraction of the annual overhead costs assigned to the
job. A mutually agreed upon profit is the reward for the contractor. This has to be an amount which
will provide the motivation to remain in this demanding business.
A "cost plus" contract can work smoothly if both parties are clear about all of the details. The
books and records must be available for review. Also, major project expenses need to be carefully
calculated in advance, so the budget can be established and monitored during frequent meetings. This
type of agreement has the most potential to be fair to all concerned, since the contractor is paid
for services which are performed.
Both contractor and client should feel that they are on the same side in the home improvement
battle. Once you have thoroughly checked references and decided to trust your home and financial
health to a good contractor, it makes little sense to start viewing everything he or she does with
suspicion. You'll have fewer concerns if you can see the situations from the perspective of the
other person. For a revealing and entertaining look at how a home project can interact with human
psychology, read House, by Tracy Kidder.
Reprinted with Permission
Cost range estimates updated for 2005.