Chapter Sixteen

Preparing for Construction

Now that you have plans and specifications, you are ready to ascertain building costs and perhaps select a contractor.

In order to obtain a reliable cost figure you must have at least three bids. Therefore, you will need to locate three contractors. Let us consider their qualifications.

In most states, it is required that construction contractors carry a license. This includes sub-contractors as well as others. It is done as a protection for the general public, by putting the holders under state control.

Thus you want licensed contractors, which indicates that they have passed comprehensive examinations. They also carry insurance, which covers both labor and materials. In the event of a dispute between you and the contractor, the State License Board may be notified and it will represent both of you in the matter.

The contractor should always be required to take out the building permit. This, for one thing, indicates that he is in good standing. It also makes him responsible for everything shown on the plans and specs. Never take out a permit yourself, if you are hiring a general contractor.

You will find building contractors listed in the yellow pages. You are looking for individuals who specialize in single family houses. An outfit that does home repairs or one which builds office buildings is not geared to your needs.

One good source of information is homes that are in the process of construction. Another is completed houses which are advertised for sale. The Sunday papers usually include pictures of many such houses.

The lumberyards are ideal places to check. They are aware of the popularity, integrity, reliability and quality of work attributed to each of their contractor customers.

It is not wise to engage union labor to build a single house. If the general contractor runs a union shop, all of his sub-contractors must be unionized. Thus you would be paying health and welfare, retirement and vacation benefits for every man on the job. Another possible detriment might be a strike, which could tie up your job for several weeks. This is too costly for small investors. As a matter of fact, as of today there are plenty of non-union people available. Their work is just as acceptable as any other.

It is understood that you are going to ask for a minimum of three bids. It is wise not to disclose their names, since it leaves room for collusion if they are so inclined.

You should have investigated each individual before you ask for a bid and be prepared to award the contract to the lowest bidder.

It requires considerable work, knowledge and time to prepare a bid, and the low bid deserves and expects the job. There should never be any job peddling, which means that you should never tell a contractor the amount of the low bid and ask if he can beat it.

Word gets around, and the day that you peddle a bid is usually the last day that you will receive another bonafide bid. You intend to be in business for a long time, and you must establish a reputation for fair play, because you need the same in return.

There are a few instances in which you might pass over the low bidder legitimately. For example, he might be unable to start your work for six months, while the number two bid could start immediately.

When the contract is signed, you and the contractor should have copies of both the plans and specifications. Each of you should initial all of the sheets of the plans involved. This is a protection for both, since it indicates those are the items to which the contract refers.

Copyright ©1995 Robert A. MacDonald, All Rights Reserved.
Last revised: May 10, 1998.