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Just curious how you guys usually pay your contractors.

I'm having a bathroom redone and some extra drywall work done on my new place.

I've had a few contractors bid the job and some are just saying it's XX per hour and some are quoting a flat price for the whole job.

I like the idea of just paying a flat rate so I'm not paying a guy XX an hour to screw around. Do you usually pay by the hour or the job?
 

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Just curious how you guys usually pay your contractors.

I'm having a bathroom redone and some extra drywall work done on my new place.

I've had a few contractors bid the job and some are just saying it's XX per hour and some are quoting a flat price for the whole job.

I like the idea of just paying a flat rate so I'm not paying a guy XX an hour to screw around. Do you usually pay by the hour or the job?
All of my bids are flat rate. Its not a good idea to get into a remodel project with an hourly type billing. If your going to do a flat rate type deal, make sure you nail down materials, be very specific with the type of products you expect. Or, if your supplying all materials, have the installer supply you with a list. Theres nothing worse than showing up to do a job and the customer doesn't have everything that is needed. Good luck.
 

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Pay by the job. Get a scope of work in writing. You may be able to insert a "liquidated damages" clause ($ deducted from bill if the job isn't completed on time). Don't pay more than 10% deposit. You can pay for materials when they arrive on the job site. Pay remainder when job is complete but hold back 10% retention untill all inspections are signed off and you are completely satified with the job.
 

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Dog Days of Summer
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Pay by the job. Get a scope of work in writing. You may be able to insert a "liquidated damages" clause ($ deducted from bill if the job isn't completed on time). Don't pay more than 10% deposit. You can pay for materials when they arrive on the job site. Pay remainder when job is complete but hold back 10% retention untill all inspections are signed off and you are completely satified with the job.
I agree with the above and any changes during construction due to unforeseen circumstances, for example, dry rot is found after you remove a wall or you change the scope. This scope change should be documented on a change order.
Change orders defines the scope change, schedule change and payment
for any work/material changes after the original contract was signed.
Make sure that any change orders are agreed to and signed before any additional work is started.
 

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Haulina29
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If a contractor excepted the terms above he is a pussy... find a contractor you like not one who tells you what you want to hear . A contractor who negotiates price is more than likely not good or in trouble. Liquidated damages on a resi bathroom remodel is halarious . The holding off ten percent until final is normal but that is not called a retention that is called a final draw... In this day and age the most important thing you can get is unconditional lean releases from the subs supplier before you pay do not accept a unconditional from your contractor or sub contractor with out a unconditional release from the subs supplier.
 

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If a contractor excepted the terms above he is a pussy... find a contractor you like not one who tells you what you want to hear . A contractor who negotiates price is more than likely not good or in trouble. Liquidated damages on a resi bathroom remodel is halarious . The holding off ten percent until final is normal but that is not called a retention that is called a final draw... In this day and age the most important thing you can get is unconditional lean releases from the subs supplier before you pay do not accept a unconditional from your contractor or sub contractor with out a unconditional release from the subs supplier.
Good post. I don't know a single contractor that will start a job with a 10% deposit. Including myself. If the customer doesn't have the money for a deposit, then they most likely don't have the money to pay for the project. To many people try to use a contractors funds to carry there project till the end. If the contractor is paying for materials, expect to atleast put a deposit equal to that down. The holding 10% back doesn't happen very often anymore, especially on a very small job like a bathroom. If you take an adversarial approach to dealing with a contractor, expect problems. The best way to find a contractor is ask someone you know that they have used and were happy. There are still alot of very good contractors out there. Take your time and find the one that best suits your needs.
 

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10% deposit for what? You want the home owner to carry the job and if the job sucks then the home owner has no leverage to get the job done right. A good contractor should have a payment schedule in the contract. The 10% retention/final payment is like insurance the job will get done. Liquidated damages I agree probably not going to happen on small remodel but if you can get it, sounds good to me.

Releases from subs/suppliers all good and write joint checks for any conditional releases.

For most home owners probably best to buy all materials with the contractor by your side and just have a flat rate contract for the work/labor. Then you won't have to worry about releases and you contractor not paying his bills. You could end up with liens on your home if your contractor doesent pay sub/suppliers even if you paid contractor in full
 

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Haulina29
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RC and Zhandfull are correct also make sure you pickup the registerd mail sent from suppliers they are pre leins they do not mean your contractor hasnt paid , it means they have the right to lein your property FYI the lein goes on the real property not against the GC. Any more in California a supplier can lein even when his paper work is not in line.... Best advice ask your friends . neighbors , relatives and get a good GC not a cheap one their still around....
 

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Discussion Starter · #9 ·
RC and Zhandfull are correct also make sure you pickup the registerd mail sent from suppliers they are pre leins they do not mean your contractor hasnt paid , it means they have the right to lein your property FYI the lein goes on the real property not against the GC. Any more in California a supplier can lein even when his paper work is not in line.... Best advice ask your friends . neighbors , relatives and get a good GC not a cheap one their still around....

I am suplying all the material from plumbing to drywall. All I am getting prices on is labor. The only thing other then labor that I am expecting the contractor to supply is the drywall finishing material (mud and tape). I was originally intending to do the work myself but this is turning out to be a fairly pricey bathroom and I'd rather have a professional install it so the finishing touches look like a high end bathroom, not something a DIYer slapped together in a weekend.

With that said I should not need anything from suppliers right?
 

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I am suplying all the material from plumbing to drywall. All I am getting prices on is labor. The only thing other then labor that I am expecting the contractor to supply is the drywall finishing material (mud and tape). I was originally intending to do the work myself but this is turning out to be a fairly pricey bathroom and I'd rather have a professional install it so the finishing touches look like a high end bathroom, not something a DIYer slapped together in a weekend.

With that said I should not need anything from suppliers right?

Material releases will be necessary only if material is delivered, or if a job account is opened under job site address and a preliminary notice is delivered certified mail. If you are worried about a sub do a credit check, that will tell you more than a license number.
 

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Haulina29
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No you should be fine , make sure everybody who works on your place is covered by workers comp and you are good to go.... You do mot want some tweaker taking a header at your place , you will be liable if comp is not in place ...
 

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Granted this is from halfway across the country, and not in the great state of Kalifornia, but here is my take on your job from a contractors point of view.

#1 you are dealing with a remodel which means that you are dealing with the previous persons work done before you. Who knows how long it''s going to take realisticly to make it come out the way you and the workman want it to.
Therefore, by the hour might not be such a bad way to go. I've found that in a remodel, if the owner wants a flat out price in order to cover my butt (labor wise) I have to add in a "fudge" factor or contingency. This is because invariably you will run into unseen circumstances which take longer, and oftentimes it is almost impossible to write a change order. However, I will always correct the problem and go on even if it costs me money.

In my experience it usually comes out to be less money for the customer by the hour. So..yea! I'd much rather give you a bid!!

Ken
 

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Good post. I don't know a single contractor that will start a job with a 10% deposit. Including myself. If the customer doesn't have the money for a deposit, then they most likely don't have the money to pay for the project. To many people try to use a contractors funds to carry there project till the end. If the contractor is paying for materials, expect to atleast put a deposit equal to that down. The holding 10% back doesn't happen very often anymore, especially on a very small job like a bathroom. If you take an adversarial approach to dealing with a contractor, expect problems. The best way to find a contractor is ask someone you know that they have used and were happy. There are still alot of very good contractors out there. Take your time and find the one that best suits your needs.

Don't know the laws in NM or CO but in CA it is not legal to take more than 10% or $1K (which ever is less).

While I agree retention on a small job like this is probably not the norm I still wouldn't pay in full until final inspections are complete.

Three years ago when things were booming here you were lucky to get a contracter to even show up for a bathroom remodel let alone sign a contract! Things are different now.

We do commercial roofing and a lot of government jobs. They are very picky on qualifications including bonding, insurance, verified payroll (prevailing wage jobs), etc. Every bid package has stated liquidated damages as well as compensatable damages. I guess a lot of that wouldn't apply to a small residential remodel but it certainly doesn't hurt to be thorough. If a contractor has a problem with this kind of stuff there may be a reason why. If he can't do the job without a substantial deposit from the customer then you are asking for trouble.

Here is a link to the CA state contractors board. I'm sure CO has one too.

http://www.cslb.ca.gov/Resources/GuidesAndPamphlets/HomeImprovementContractsConsumerGuide.pdf

Oh, and get verifiable references!!!
 

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No you should be fine , make sure everybody who works on your place is covered by workers comp and you are good to go.... You do mot want some tweaker taking a header at your place , you will be liable if comp is not in place ...

This is excellent advise. If your contractor is not insured they will go after you/your homeowners insurance. Ask for a copy of their policy and a quick phone call to verify coverage.
 

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Granted this is from halfway across the country, and not in the great state of Kalifornia, but here is my take on your job from a contractors point of view.

#1 you are dealing with a remodel which means that you are dealing with the previous persons work done before you. Who knows how long it''s going to take realisticly to make it come out the way you and the workman want it to.
Therefore, by the hour might not be such a bad way to go. I've found that in a remodel, if the owner wants a flat out price in order to cover my butt (labor wise) I have to add in a "fudge" factor or contingency. This is because invariably you will run into unseen circumstances which take longer, and oftentimes it is almost impossible to write a change order. However, I will always correct the problem and go on even if it costs me money.

In my experience it usually comes out to be less money for the customer by the hour. So..yea! I'd much rather give you a bid!!

Ken

I wouldn't go hourly unless you have the time to be at the jobsite while they are working. The scope of work should define what is to be done and the exclusions section of the contract should state dryrot, structural instabilities and other factors not known or disclosed at the time of contract. Those will all be done with change orders.

I think it's in Newport Harbor but there is a big cruiser with a dingy. The dingy is named "Original Contract" and the cruiser is called "Change Order"! :D
 

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Don't know the laws in NM or CO but in CA it is not legal to take more than 10% or $1K (which ever is less).

While I agree retention on a small job like this is probably not the norm I still wouldn't pay in full until final inspections are complete.

Three years ago when things were booming here you were lucky to get a contracter to even show up for a bathroom remodel let alone sign a contract! Things are different now.

We do commercial roofing and a lot of government jobs. They are very picky on qualifications including bonding, insurance, verified payroll (prevailing wage jobs), etc. Every bid package has stated liquidated damages as well as compensatable damages. I guess a lot of that wouldn't apply to a small residential remodel but it certainly doesn't hurt to be thorough. If a contractor has a problem with this kind of stuff there may be a reason why. If he can't do the job without a substantial deposit from the customer then you are asking for trouble.

Here is a link to the CA state contractors board. I'm sure CO has one too.

http://www.cslb.ca.gov/Resources/GuidesAndPamphlets/HomeImprovementContractsConsumerGuide.pdf

Oh, and get verifiable references!!!
Our laws are different. Max on deposits aren't set by the state. I'm a GB98, and an EE98. My jobs range from a few thousand to well into seven figures. We never got the out of hand situations like you guys did in Cali. Our market stays fairly steady, it doesn't typically have huge fluctuations. I've got quite a few clients that are repeats that I don't ask for anything up front. If they're completely new, I do ask for upfront money. My deposits cover material cost, not labor. I've learned over the years to try and avoid the customers that are shady. Generally speaking most people completely understand covering material cost, and the ones that don't I just politely bow out. I'm very fortunate that even in todays market I can still pick and choose a little. The best advice that has come out of this thread is make sure whoever works on your home provides licensing and insurance information.
 

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Good contractors are always in demand. They will most likely have a good contract as well (that has been time tested). In CA the 10% is up front $ only. The schedule of payment will cover materials as you go.

We do commercial properties only, so we don't have to deal with home owners! :))eek:)):D It's funny, sometimes the contractor has to check the homeowner's references!
 
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