Working with Contractors on Home Improvement and Repairs
People often hire contractors for large home improvement projects and/or repairs. Home remodels are typically challenging on their own, and dealing with an insurance loss due to some accident or natural disaster can be especially difficult. Whether you are putting in your dream kitchen, adding an outside patio, or dealing with damage from a water leak, it is important to understand how contractors fit into your overall plan.
PART 2 – What agreement is being proposed?
There are three common contract arrangements when a person is preparing for a home improvement / repair project. There may be different arrangements altogether, so it is important to understand what is being proposed.
- Lump Sum Contract – this is the typical home improvement contract. You will have a contract with the general contractor, and it is the general contractor’s job to coordinate and pay for all the work by the subcontractors.
General Contractor (the “GC”) – when you have a lump sum contract, the general contractor oversees and manages subcontractors (contractors with a specific trade) and suppliers.
Subcontractors (the “sub”) – when you have a lump contract with a general contractor, the contractors who perform their specific trade are subcontractors. There will typically be multiple subcontractors (e.g., concrete, carpentry, plumbing, electrical, flooring, cabinetry, tile, etc.). The different subcontractors work during different phases of the project. The general contractor should coordinate all work between the subcontractors to complete the project in the agreed time frame.
- Construction Manager – this is not uncommon in home improvement, but this arrangement is different than the lump sum contract. In this situation, the construction manager will identify the various trades for you to pay directly. The construction manager will coordinate the work, but you are responsible for paying the various trades (they are not technically a subcontractor since you pay them directly, but are commonly referred to as subcontractors). The construction manager is often paid a lump sum or a percentage of the total project cost.
- Specialty Contractor – with smaller projects limited to one issue (e.g., flooring, roofing, window replacement, foundation, etc.), you will often deal directly with a specialty contractor. Because there is just one area affected, there is typically not a general contractor. In this context, it is not uncommon for the specialty contractor to use its own subcontractors for skilled labor, but there is typically no need to coordinate different trades.
Don’t sign anything yet! Once you have a contractor and an idea of the relationship you will have with your contractor, it is important to go through the construction contract to understand what is in the actual agreement. Our next topic will cover important terms in any home improvement / repair contract.
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