| Should I move out? | | | | position. A qualified contractor should have sufficient |
| The first important thing to consider is will remain in | | | | resources to fund the construction of the job |
| your home or move out for the duration of the | | | | without advances. |
| project. If your project involves any substantial | | | | The frequency of progress payment should be |
| remodeling of existing spaces, I urge you to move to | | | | defined in the contract usually weekly, bi-weekly or |
| temporary quarters. What do I mean by substantial? | | | | monthly. When the contractor submits his application |
| Well if it is anything more than painting or floor | | | | for payment, the site should be visited and the |
| coverings, the work is substantial. Work that involves | | | | application verified against the actual work performed. |
| moving walls, reworking electrical, plumbing or | | | | Here is another instance when having an architect on |
| mechanical systems can make your home unlivable. | | | | your team pays many times over. An architect will |
| Rent the movie “The Money Pit” and | | | | visit the site, verify the work in place and provide |
| see what I mean. On the other hand, if you are | | | | you with a written report. He will also certify the |
| having an addition to your home, you may be able to | | | | application for payment. |
| remain and not be overly affected by the work. You | | | | With this paperwork in hand you can feel confident |
| should discuss your options with your architect | | | | the contractor is not being paid for work in advance. |
| designer early on in the project. | | | | On a personal note, the very first job I monitored |
| If you are going to vacate, then move all your | | | | early in my career the contractor submitted a |
| belongings out of the areas of work to a secure | | | | payment application with a huge advance he said was |
| location. With the contractor in full control of your | | | | for materials he had ordered. I refused to certify the |
| property, you don’t want things to disappear. | | | | payment. We later found out he was trying to |
| You also may realize some savings since the | | | | scrape together enough money to pay for his |
| contractor will know his workflow will be | | | | Colorado deer hunting trip the next week! |
| uninterrupted. | | | | Retainage |
| Permits | | | | Retainage is another issue to be considered during |
| A building permit is generally required whenever | | | | the contract negotiations and is an important |
| structural work is involved or when the basic living | | | | safeguard for you as owner. I recommend 10% be |
| area of a home is to be changed. To be sure, check | | | | withheld from every payment application. Your |
| your local requirements. If your contract does not | | | | architect can advise you on this. The purpose of |
| provide that the contractor will obtain the permits | | | | retainage is simply to keep the contractor interested |
| and he doesn't, you may be held legally responsible. | | | | in finishing the project. There is an old saying in |
| Do not get any permit yourself. If you do, you will be | | | | construction that “the last 5% of a job is the |
| considered to be the contractor, and you could be | | | | hardest to complete”. By the time your |
| held liable if the work does not comply with the | | | | project is 95% complete, the contractor has likely |
| building codes. | | | | started another job. His attention is naturally focused |
| Notice to Proceed | | | | on the job that will make him the most money for |
| Prior to starting work, you should issue a formal | | | | that current month. Having an extra 10% keeps him |
| "Notice to Proceed". This will serve to document the | | | | interested in completing your job. |
| official start date for the project and will define the | | | | The final payment including retainage is normally not |
| agreed completion date. This is important for several | | | | approved until all work has been inspected, all |
| reasons. First the dates of start and completion are | | | | paperwork is turned in and any requirements of local |
| clearly spelled out. Second, many states have time | | | | building officials have been completed. |
| limitations on when Liens can be filed based on those | | | | Protect yourself |
| dates. Third, it lets the contractor know you will be | | | | Once the work begins, if your contractor will have to |
| monitoring his progress. You don’t want to | | | | use subcontractors, you should protect yourself from |
| have to be asking the contractor when he will be | | | | liens against your home in the event the primary |
| done and his answer every time is "two weeks". | | | | contractor doesn't pay the subcontractors or |
| Schedule of Values | | | | suppliers. You can do this by insisting upon a lien |
| Most standard construction contracts require the | | | | release from all subcontractors and suppliers before |
| contractor to furnish you with a Schedule of Values. | | | | you pay for any work. Or, you can use the services |
| The Schedule of Values is a detailed statement | | | | of a construction control company. For a small |
| furnished by the contractor, builder or others outlining | | | | percentage of your contract price, you may deposit |
| the portions of the contract sum. It allocates values | | | | your payments with them and they will disburse the |
| for the various parts of the work and is also used as | | | | funds and secure the lien releases for you. Although |
| the basis for submitting and reviewing progress | | | | they are not required to inspect the work, they |
| payments. | | | | generally do. |
| The schedule will be broken down by the major | | | | Inspections |
| steps in the project making it easy to monitor the | | | | Inspections will occur throughout the project. There |
| progress of the job as well as validate applications | | | | will be local required inspections performed by the |
| for payment. For example, the schedule of values | | | | local building officials. Additional inspections will be |
| allows $2000 for interior doors. The contractor | | | | performed to certify payment applications and to |
| submits a payment application that includes $2000 for | | | | monitor the progress of the work. |
| interior doors. If the inspection shows all the interior | | | | Change Orders |
| doors are in place, the contractor is entitled to full | | | | Even with the best plans and specifications, |
| payment for the interior doors. If the inspection | | | | sometimes hidden conditions will be uncovered that |
| shows half the interior doors are in place, the | | | | will require a change order. These conditions can |
| contractor is only entitled to 50% or $1000 on the | | | | range from problems with the soils on your site to |
| current payment application. | | | | uncovered substandard construction that must be |
| Monitor progress daily | | | | brought into compliance with current codes. For too |
| During the course of the work, it is important you | | | | many contractors, this is where they plan to make |
| visit the work area on a daily basis. The best time is | | | | their money by bidding low to get the job and then |
| after working hours. This way you can see if the | | | | hitting you with a flurry of inflated change orders. |
| contractor is proceeding in a timely manner. This daily | | | | Your architect will assist you in validating any change |
| monitoring can alert you early on to potential | | | | orders negotiating a true and fair cost. |
| problems the contractor may have being able to man | | | | Also be aware, if you decide to make changes during |
| the job or pay for materials. | | | | the course of the work because you don’t like |
| Take photos | | | | something or want a different material, you will |
| There is no better way to document progress and | | | | receive a change order and the price will be much |
| problems than by taking photos and lots of them. I | | | | higher than if you made the change during the |
| suggest you buy a digital camera if you don’t | | | | planning stage. Again, proper planning will eliminate or |
| have one and use it every time you visit the site. | | | | minimize these costly change orders. It is not unusual |
| Payments | | | | for a poorly planned project to double in price during |
| First, on the subject of down payments, my advice | | | | construction. |
| to you is making a down payment weakens your | | | | |