Protect Your Investment: 8 Steps for Hiring a Contractor

Board members for community or condo associations understand the importance of finding the right contractors for their projects but choosing one can be challenging. What should you look for when hiring a contractor? Where do you begin? It’s simple. Just follow these 8 steps.

Step #1. Define your project requirements

Defining your requirements should be your first step. Start by making a clear and concise list of what you want to accomplish. Include a timeline, budget, scope and other specific needs. Defining your requirements will help ensure that all parties involved are on the same page.

“A well-defined project with clearly stated requirements helps to mitigate the risk of misunderstandings, conflicts, and disputes between you and your contractor,” according to Dante Chiabra, vice president at FirstService Residential. “It provides a solid framework for project management, ensuring that progress is tracked, milestones are met, and potential issues are addressed before they become major problems.”   

Step #2. Get recommendations of reputable contractors

Before hiring a contractor, ask someone you trust for a recommendation. They can attest to the contractor's work ethic, punctuality and dependability and help you narrow your choices.  "Don't be afraid to ask trusted sources in your community, such as friends or colleagues,” said Jeff Musselman, vice president at FirstService Residential. “Getting recommendations from people with first-hand experience can provide invaluable insights into the contractor's performance.

Step #3. Ask questions and do your research

The best way to make an informed decision when hiring a contractor is to gather as much information about them as possible. Create a list of questions to discuss. Ask what experience the candidates have with this type of project. What is their estimated completion timeline. Ask questions to help ensure the contractor’s background aligns with your expectations and clarifies any specific deadlines you may have. You’ll also want to ask how project changes and unexpected issues are handled. Find out who will work on the project. Determine if the contractor will use subcontractors or have a dedicated team. And if there will be subcontractors, ask about their qualifications and insurance coverage. Are permits required? If so, who obtains them? How are payments handled? These are just a few important questions you’ll want answers to before making a hiring decision.

Are you interested in learning about planning and executing capital improvement projects? Download our guide, Building to Last: Mastering Capital Improvements

Step #4. Check references

When hiring a contractor, ask the candidates for references. Past customers can tell you about the contractor's reliability and attention to detail. Put together a list of questions about how previous projects were handled. For example, did any unforeseen issues arise during the project, and how were they addressed? Also, ask them about the contractor's communication skills. Communication skills are critical to a successful project; clear and frequent communication between your board and the contractor is vital.

Step #5. Ensure the contractor is licensed, bonded, and insured

You may have heard these three terms before, but what do they mean, and why are they important?

• Being licensed means that you have the necessary competence, meet minimum requirements, and are permitted to conduct business in your state, and sometimes local municipalities as well.

• When a contractor is bonded, it means its customers are protected from losses they may suffer by a surety or bonding company. This is if the contractor does not fulfill its contractual obligations, similar to a guarantee.

• Lastly, when a contractor is insured, it has coverage designed to protect it and its customers from financial losses and liabilities resulting from various unforeseen circumstances, including the contractor’s actions. This includes damaging a customer’s property or causing personal injury, which provides a safety net for the contractor and the customer.  

Hiring a licensed, bonded and insured contractor will give your association peace of mind that it will be protected should issues arise after the work begins. Involve your association’s legal counsel when determining if a contractor has the licensing, bonding and insurance coverage your community needs for the project.

Listen to our podcast, Get on Board: Capital Projects Demystified, to learn how one of our communities took a unique approach to managing capital improvement projects.

 

Step #6. Get at least 3 proposals

Bidding is an essential part of the contractor hiring process. It promotes transparency and fairness in contractor selection, preventing favoritism, biases, or unfair practices and fostering a level playing field.

During the bidding process, candidates submit proposals outlining their pricing structure. Bids often also include detailed information about contractors' qualifications, experience, and past work, so you can determine if they have the necessary skills and expertise to complete the project successfully. With multiple bids, you can evaluate the financial feasibility of different options and choose the one that aligns with your budget.

When obtaining bids, be aware of desperate contractors who only want money. If the bid seems too low, ask why. Sometimes the price does not indicate a good deal but instead means the contractor plans to use low-grade materials and unskilled labor.

Step #7. Get it in writing

Putting the project in writing (in a contract both parties will sign) ensures that you and the contractor clearly understand the project’s requirements, scope, and expectations. Having a clear understanding of what needs to be done, by when, and at what cost should minimize misunderstandings. The contract should outline the project's terms and conditions, including the timeline, payment schedule, materials, warranties, and other relevant details. Having these details in writing protects both parties and provides a reference point in case of disputes or disagreements. And, of course, have all agreements and contracts reviewed by your association's legal counsel before signing on the dotted line.

Step #8. Trust your instincts

Trust your gut feelings. If something doesn't feel right or you doubt a contractor’s ability to deliver quality work, continue your search. A contractor who instills confidence and trust will give you peace of mind.

A good contractor understands your community's vision, provides quality service, and executes good work on time and on budget. A bit of homework and research upfront will save you time, effort, money and headaches in the long run.

For guidance and more information hiring a contractor, contact FirstService Residential.