Home Improvement Contracting Process

As a home owner, it is important to you to understand the contracting process in order to protect your investment. At Building Concepts, we will go through each one of these steps with you prior to taking on your project. Although no project is without issues, understanding the construction contracting process will help you deal with these issues as they arise.

Scope of Work and Contracts: The contracting process begins with an understanding of the work that you as the owner require. Open communication with your contractor is essential to fully understand your needs and develop the scope of work for your review and approval. Once a scope is agreed upon in the form of a signed contract, the responsibility is put on the contractor to perform the work in a timely fashion. Caution: Read your contracts carefully and if you have any concerns, make sure they are addressed before signing the contract. Many contracts are vague, and clarifications are often given orally only to be recanted later when the work is underway. If your contractor does not promptly return your calls or respond to questions, this is typically an indication of things to come.

Design and Permitting: Before starting most projects, at least one permit is typically required. Permitting depends on the local jurisdiction and typically requires the owner’s and/or contractors’ information. Some permits require detailed design drawings (plans) in order to obtain a permit. Caution: If you have plans drafted by your contractor, make sure they are prepared by a qualified individual and representative of the work. Permits must be posted at the job site. Take time to review the permits for the names listed and general descriptions of the work. If something doesn’t look right, you can call the permitting office directly. Many contractors are working without licenses and using other contractor's license to pull permits.

Executing the Work: The contractor should being within a few days of the promised start date. A competent contractor will develop a schedule early on to take into account material lead times, workforce allocation, subcontractor schedules, and site conditions in order to meet your completion date. Generally, the quicker the project is completed, the more successful it is for both parties. Caution: Construction is seasonal work, and many contractors will take on more work than they can handle at one time. A warning sign is when a contract is signed with an agreed upon start date; the contractor begins work, but does not provide adequate resources to complete the work within the established schedule. Or, the contractor begins work, but leaves the job for several days. Comes back and works for a few days, then only to leave again.

Quality Control and Compliance with Permits: Typically permits require inspections by the local jurisdictions. This is not a quality control process, but a way to ensure compliance with minimal code requirements. The owner should always review the work, especially prior to closing walls or placing foundations. Inspections can be performed by hiring an independent competent inspector or by simply going having the contractor go around and explain the work to you on a periodic basis. Caution: Quality control is often neglected on residential projects due to owners not fully understanding construction standards only to find issues with the work long after the contractor is gone.

Changes and Additional Work: Most projects will require some sort of scope change or adjustment at some point. This is not necessarily a bad thing, especially in older homes where there may be unknown conditions. The contractor will often initiate the change due to unforeseen conditions, however, the owner is the only one authorized to approve a change in scope. Caution: Often changes in the work require the owner to react quickly in order to not stop the work. Have the contractor explain to you the issues and costs in detail. A major change in the work should be done in writing by signed change order of contract amendment.

Payments for Work: As the contractor is obligated to perform the work in the contract, you as the owner are obligated to making timely payment. No more than 1/3 of the contract amount can be required before a signed contract. The contract is your best mechanism for describing the payment schedule. Indicating progress payments as work is completed based on milestone work progress, is typically the best way to do away with what can be an uncomfortable situation between a contractor and the owner. Knowing when a payment is due, helps you as the owner budget your project and keeps the contractor financially sound as he is purchasing materials and paying for labor. Caution: A payment schedule should be included in the contract should be clear to what is being paid for. As you make payments, you now own that portion of the work. If a contractor is asking for out of schedule payments, to pay his subs, purchase materials, etc. this is a sign of the contractor having financial issues and using your money to possibly fund other projects.

Maryland Home Improvement Commission has specific requirements for home improvement contracts. All contractors and sub-contractors are required to be licensed. The contract needs to be clear as to what is to be performed and indicate not only the overall price, but also the beginning and completion dates. Contracts can also be cancelled within three days of signing by providing proper notice.

For more information on MD Home Improvement Commission, go to: http://www.dllr.state.md.us/license/mhic/mhiccon.shtml