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Castillo and Co ramblings regarding construction industry topics. We’ll cover some big questions that clients may have and also share some valuable insight from a contractor’s perspective.

4 Common Mistakes in Hiring a Contractor

Over the course of my life I’ve heard countless stories from people of having nightmare (almost criminal) interactions with contractors. This theme is nothing new but surely deserves some attention as we begin our journey in delivering insight and exploring some of the most important topics in construction.

We’ve compiled a non-exhaustive list of 4 Common Mistakes that homeowners and businesses make when hiring a contractor. We’ll skip through some obvious suggestions such as references and get deeper into industry specific markers that help identify a healthy contractor experience.

1) NOT ASKING ABOUT INSURANCE

Construction is a high liability business. The chances of something breaking or being damaged is actually quite high. Let’s be real…forklifts are not human proof and winds occasionally carry construction debris if not contained properly. It’s best to ask your contractor if they have liability insurance and even to specify amount of coverage.

If no insurance…look elsewhere.

2) IGNORING CONTRACTORS CREDIT STATUS W/ SUPPLIERS

Most good contractors have credit account relationships with building materials companies. We’ve seen so many occasions where homeowners or business owners are left standing in line at Home Depot or Lowe’s trying to find the right lumber or drywall because the contractor cannot afford the operating costs associated with the job.

Save yourself time…you have plenty on your plate already to be running around doing THEIR JOB. Ask the contractor where they currently have credit accounts and if they are in good standing.

3) “ I TRUST THEM”

Trust is temporary…contracts are forever. At Castillo and Co we work very hard to establish relationships of trust. However, we provide clients with assurance via transparent contracts that define scope of work, inclusions, and exclusions.

Never…I Repeat…Never. Engage in a construction transaction that does not clearly outline specifications (must show specific product or service), included products/services, and excluded products or services. If it is not specifically listed in the contract you MUST assume that it is not included. Any verbal agreements made outside of the original contract should be finalized in writing and signed by both parties.

4) PAYING IN ADVANCE

Most contractors and construction agreements handle payment on a “work completed” status. This means that at the end of every week contractors, depending on contract terms, may be due for amount of work completed.

Contractors that ask for payment in advance are, in reality, asking you to pay off a prior job gone wrong or are so tight on their finances that they may not be able to complete the job at hand.

One smart and simple way to maintain leverage in this relationship is a retainer. A Retaining Percentage of 25% from every weekly draw can be the difference between a contractor running off the job and leaving you for a bigger and better job. Simply put, if the contractor has a total contract of $10,000 and they’ve completed $4,000 worth of work this week. You’d pay only $3000. This will provide incentive to the contractor and maintain leverage in the event that work is not performed to your liking.

Always…ALWAYS keep leverage.

We hope you’ve enjoyed our first installment of our blog! To learn more about contracting and for questions regarding this post please feel free to email us at info@castillotx.com.

-Chris Castillo

Owner

Castillo and Co