Bids and Price

It is advisable to get at least three written bids using identical plans and specifications so you can compare prices and contractors. Obtain competitive bids for the project. Solicit at least three bids for the work you need. The basis of a contractor's price is important. Do not necessarily hire a contractor with the lowest estimate. Examine and breakdown each estimate. Is the price of materials low compared to other estimates? The materials could be inferior. If the contractor's price is lower than other estimates, his standard of workmanship may not be up to par with more qualified contractors. Or the contractor may have made a mistake on the price. Weigh all factors—price quote, references, and professionalism—before deciding. Make sure you are bidding apples to apples. Make sure all bids are based on the same set of specifications, materials, and scope of work. Discuss the bids in detail with each contractor, and make sure you understand the reasons for any variations in price. Sometimes a higher price may be worth it if the materials to be used are of higher quality or the work is more extensive.

It is recommended that you hire a contractor with five or more years of experience. Research has shown that contractors with five or more years of experience are likely to have a solid business foundation and are therefore more likely to be reliable.

Verify Insurance

It is extremely important that a contractor be properly insured to protect you from potential legal problems. A contractor should have the following types of coverage:

• Workman's Compensation Insurance – protects you in case a worker is injured on your property.
• General Liability Insurance – covers you in case a contractor damages your property.
• Automobile Insurance – protects you in case a contractor's vehicle damages another vehicle on your property.

The form in which you receive a contractor's certificate of insurance is especially important. To ensure that a certificate of insurance is valid, the certificate should be mailed directly from the insurance agency to you. The certificate should name you and your property as co-insured. It is not adequate to accept a photocopied or faxed certificate of insurance from a contractor because you have no assurance

that the certificate is authentic.

Education

You should hire a contractor who places emphasis on continuing their education. Contractors who attend industry seminars, trade shows, and take classes remain abreast of the latest techniques and solutions for improving your home as well as successfully managing their business.

Professional Designation

Several industries offer contractors the opportunity to earn professional designations. To earn a professional designation, a contractor must take classes and pass a core competency test. Contractors who pass those tests often provide a higher level of professionalism. Not all industries offer professional designations.

Member of Trade Organizations

Look for a contractor who is a member of an applicable trade association. Membership in a trade

association is convincing evidence that a contractor has taken the initiative to stay current with industry

standards and business practices.

Licenses

Be sure your contractor's license is valid and current go to: https://www.myfloridalicense.com/Default.asp

Dispute Resolution

You should hire a contractor who clearly explains in your contract how disputes will be resolved. A dispute resolution clause should call for mediation or arbitration if a dispute arises between you and your contractor. Mediation and arbitration are quick and inexpensive resolutions to a dispute,  particularly when compared to resolving disputes through the legal system.

Here are several important components that should be included in your contract:

Your contract should contain the starting and projected ending dates of the project. Include liquidated damages amounting up to $1,000 per day for each day of delay beyond the scheduled completion date.

If there is a payment schedule it should be included in the contract. A payment schedule will detail when payment is due to a contractor and how much money you will pay him. Often, you will pay specified amounts at certain milestones in your contract. To avoid miscommunication and confusion, payments should be made at clearly defined intervals. Often, a contractor will request a deposit when you sign a contract. Any advance deposit should be equivalent with the risk involved for the contractor. For example, if your contractor needs to special order materials before construction begins, you may be asked to cover some of the special-order costs in the deposit.

If a contractor offers a written warranty, it should be referenced in the contract. The warranty should cover materials and workmanship. The names and addresses of the parties honoring the warranties (contractor, distributor, or manufacturer) should be identified. The length of the warranty period and any limitations should also be clearly stated.

If a dispute between you and your contractor arises, your contract should specify how the dispute will be resolved. The way the dispute clause is referenced in your contract is important. Check with your local building department. You may wish to consider that the contract should state that the contractor must agree to purchase all applicable permits.

The contract should reference the contractor's insurance. Your contract should include specific details explaining the duties of the contractor. For example, the contract should specify who is responsible for clean-up during and after the job. Detailing each party's specific duties in the contract will help you avoid confusion and delays once your project has begun.

The scope of work and specifications for your project should be included in your contract. Scope of work details exactly what the contractor will do during the project. There should be no generalities in this section; only specific details explaining exactly what work the contractor will perform.

Specifications for your project should include an exact list of materials to be used, with brand names of materials (where applicable). You may wish to consider hiring an engineer to write the specifications.

Make sure your contractor gets all necessary building permits from your local building department. In many instances a negative contracting experience can be easily avoided by knowing the warning signs associated with less-than-professional contractors.

Lien Waivers

A signed lien waiver is given by a supplier of materials or services to the owner to formally acknowledge that there is no right to file a mechanic's lien. During the project, contractors will contract with a number of different companies and individuals. These suppliers provide materials or construction services or both. Each of the suppliers, if not paid, may have the right to create a lien on the property to secure payment. These liens are called "Mechanic's liens" Many associations pay their contractor in full, only to be confronted later by a subcontractor who has not been paid. They are then faced with the issue of subcontractors and suppliers that have dealt only with the general contractor. Unfortunately, the subcontractor can file a mechanic's lien, thereby forcing the owner to pay the same bill twice (once to the contractor, and again directly to the subcontractor). You can make installment payments to the contractor that is conditioned on the delivery of one or more lien waivers. Make sure that your contractor agrees to this. Otherwise, there may be no evidence of the waiver and the lien could later be successfully created. To be effective, the waiver must clearly state that the supplier voluntarily and knowingly waives the right to assert a mechanic's lien.

Payment Schedule

Make sure the payment schedule is based on the contractor’s performance. Never let your payments get ahead of the contractor’s work, and make sure the contract provides for a “retention” — a percentage of each payment or of the total job, ordinarily 10 percent, which you retain until the job is completed.

Keep a Job File

You should keep a file of all papers relating to your project. It should include:



1) The contract and any change orders.

2) Plans and specifications.

3) Bills and invoices.

4) Canceled checks.

5) Lien releases from subcontractors and material suppliers.

6) Letters, notes, and correspondence with your contractor.

7) Pictures of the job in progress.

8) Records of each subcontractor who works on your project, the work performed, and length of time on the job.

9) Keep a list of material suppliers who make a delivery, include the name of the company, the date, and a general description of what they delivered.

10) Keep a record of who has and has not been paid. When you receive preliminary notices from subcontractors or suppliers, make sure you receive lien releases. Check them against your list.

Despite all the precautions you have taken, problems will sometimes occur with the work that was done. If problems do occur, either during construction or afterward, contact your contractor. Usually, he or she will make corrections willingly. Be sure to address all problems or complaints directly to the contractor in writing, so that you both have a record. Should the contractor refuse to make corrections, you can file a complaint in writing with the Contractors State License Board and your local building department. If necessary, consult an attorney.

Every community association manager, board member or homeowner can share a nightmare story about their past projects. Protect yourself—and your budget—do your homework and plan responsibly when managing your project and you will look back on the success of the project. By carefully considering what you want done to your property, what it will realistically take to do the job, and taking the time to research and check the license of the professional you hire to do the job, you will avoid many of the headaches often associated with contracting for projects.