Saturday, 10 December 2016

Hiring Contractors: best practices in real estate construction projects

You have made the big decision – you are going to build, modify, or renovate your investment property. No matter which type of property construction project you are undertaking, having the right contractor resources is key to the successes of your real estate development project.
Whether you are at the concept stage still deciding the nature of the project, or if you have detailed plans and are ready to execute, you should consider all of the service providers you will need to utilize as contractors who must deliver quality results for you. You may decide to hire one lead contractor (a general contractor) to handle all aspects of the project for you, or you may decide to engage with trades directly. Either way, following some simple best-practices in contractor hiring can help ensure you get the outcome you want for your construction project.
From architects and designers to the subtrades, the resources you hire are contractors for which the best practices in this article are applicable.  If you run into any contractors who believe they are exempt from the best-practices – for example, there are unfortunately many contractors out there that believe having a clear written agreement with their customers is not applicable to their work – then you should carefully consider whether they are the right fit for you.
These best practices will help keep your contractor relationships on track:
Find Qualified Candidates
Finding the right contractors to get proposals from is critical.  Without a good selection of contractors to get proposals from the rest of your efforts will be hindered.  Referrals are your best tool and your best sources are:
  • Personal Contacts – call up a friend who has completed a similar project
  • Industry Associations
  • Building Materials Stores
  • Other Contractors – get a referral from someone you have good experience with
Conduct an Objective Assessment
Once you have the proposals it's time to assess and decide.  Key factors include:
  • Meeting Requirements – all requirements met in the proposed service or solution
  • Value-Add – contractors should be able to show their expertise in their trade by proposing improvements or efficiencies for your project
  • References – always check references – it is a good idea to ask for information on the contractors last 5 projects worked on so you can choose a few to call upon
  • Good Fit – assess how each contractor generally fits with your style of doing things
Document Clear Project Requirements
The project scope should be documented and clear enough so that anyone who reads the requirements can understand what the project is to accomplish.  Items to be covered:
  • Services Scope – the work to be completed and the materials to be used
  • Building Permits – clarity on who is responsible for acquiring necessary building permits
  • Specifications – detailed requirements criteria especially for key items including performance, function, and appearance of the completed work
  • Timeline – when the work will be completed
  • Quality – how the quality of work will be assessed including adherence to standards/codes and passing municipal or 3rd party inspections.
  • Warranty – the period for which issues be resolved at no charge including parts and/or labour
Have a Written & Signed Agreement
A key principle in contractor management is to "get it in writing".  Ensure that you have a written and signed agreement with your contractor that covers the key items important to the project, including at a minimum:
  • Project Requirements (see above)
  • Price & Payment Terms
  • Liability & Insurance Responsibilities
  • Dispute Resolution Plan
  • Quality Controls
Successfully creating and managing contractor relationships is a critical factor in achieving positive outcomes in real estate contraction projects. By following the above practices you should be off to a great start in achieving your real estate development goals.
Visit www.kazawest.com/articles to access an illustrated version of this article as well as related informative articles.

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