Home Tips : Hiring a General Contractor

Finding the right professional to handle a major home improvement project can be tricky. Trickier still is getting a great job at a fair price.

Case in point: A few years ago, my neighbor launched a major remodel and hired a "contractor friend"--a dad from his son's scout troop--to manage the work. The friend agreed to work on a "time and materials" basis, charging my neighbor an hourly rate and passing along expenses for plumbers, electricians, and other workers. My neighbor agreed to pay for all materials. This sounded like a good deal, but the details of how it would actually work were a bit fuzzy.

My neighbor's remodel should have cost $100,000 tops. Instead, he spent more than $225,000. Hours raged out of control, and the contractor pulled some pretty shady practices: He employed family members to be his subcontractors--and paid them handsomely out of my neighbor's pocket. So much for "friends" doing your work. The moral? Shop around for reputable contractors and forge an agreement that is clear and fair.

Find a general contractor the same way you would find a repairperson--ideally, through personal recommendations--talking with local building-supply dealers or through online services--though be sure the service you use has a strong method of certifying their contractors. Use the telephone directory as a last resort.

After you've put together a list, call and pre-qualify several, checking to be sure that each one is licensed and insured for worker's compensation, property damage, and personal liability. Then meet with three or four of them individually to make sure they can handle the work and your schedule, and request the names and numbers of a few of their satisfied customers. Call those references to check whether they were happy with the contractors and note any problem areas. Whenever possible, visit past clients' homes to see the contractor's work first hand. Don't be shy--most people who've undergone a successful remodel are proud to show off their homes.

From at least three contractor candidates, request a formal bid based on exactly the same plans and specifications. Don't jump for the lowest bid--this may indicate inexperience or desperation on the contractor's part. Generally speaking, if a bid looks too good to be true, it probably is.

Chemistry with your contractor is critical. Remember, this person will be in your midst doing major construction, and there will be times when you may need to deal with difficult issues. Also probe the candidates' level of commitment to your project--ask how long they have been in business and whether they will have other ongoing jobs while they're working on yours. If they have other work coinciding with yours, ask how much personal supervision they will be giving to your job.

When you've settled on one contractor, ask to see his or her contractor's license and also ask for the name of the insurance carrier and agency so you can check the coverage.

When the job is finished, if you feel you've been cheated or wronged, you may lodge a formal complaint with the contractor's licensing board (this is one of the reasons it's important to work with licensed professionals). Through that board, you may request arbitration or a hearing. You can also contact the Better Business Bureau or bring suit against the contractor and/or his or her company, or bring the matter before small claims court.

If the contractor doesn't pay subcontractors or materials, the people owed money may be able to place a lien against your property. You can protect yourself from this on a large project by adding a release-of-lien clause to your contract and issuing your payments to an escrow account to be held until the work is completed, though this can be pricey.