In this day and age finding a reliable and solid contractor to complete a remodel or renovation can be a very daunting task. The reality is that no independent contractor or contracting company is alike and this can make an apples-to-apples comparison a unrealistic and non-existent goal. From the stand point of a contractor this becomes a larger challenge when a potential client is taking on multiple bids for a project and price enters as their major determining factor. This article is written with the intention to shed light on a topic which has consistently lead renovation clients into a renovation disaster scenario with numerous negative outcomes for all involved.
Before I get into the reasons why the lowest price can lead you to a problem scenario I want to provide some background information. Like many people I come from a culture where we have always been conditioned to ask for a better price or even in some situations grind down the seller to get the best deal possible. Personally I can recall bragging to my buddies that I scored a incredible deal buying a used car. My tactic was quit simple, I knew that the seller was negotiable and after asking a few questions I uncovered that the seller was in a vulnerable position where they needed to get rid of the vehicle. Praying on their vulnerability I was able to execute some hardball negotiating tactics and the car was mine at a steal. I had no remorse for the seller because hey, it’s just business. I’ll admit that this skill passed down from generation to generation has paid off for me many times in my life, but I know that by no means this would ever facilitate a win-win situation. When it comes to renovations a win-win deal needs to be achieved or you quickly end up with a sure fire recipe for trouble. I’ll explain.
Now I’m not saying that you should get ripped off on a project, and I’m definitely not saying that you can’t find a good deal, but always keep in mind that if the deal is too good to be true it probably is. This holds very true to renovations because the savings have to come from somewhere and this is where corner cutting comes into play and the problems start. Due to the dynamics of any renovation project grinding down the contractor’s price is highly inadvisable for the following reasons:
- Overall quality of work or workmanship is directly affected by the labour involved. Good quality labour comprising of talented tradespeople come with a certain price tag. These types of tradespeople usually have a more professional approach and care about the results. Also, because of the level of compensation moral is high on the job site throughout the project, which results in a better finished product.
- No renovation or remodel has a fixed cost, therefore a good contractor usually budgets a certain amount of money to cover unforeseen challenges, call it a miscellaneous fund. This may be seen by some clients as part of extra profit to the contractor, but the reality is that this money is always used in some way shape or form. The chances of not having some kind of unforeseen challenge is rare.
- Mike Holmes, Canada’s most trusted contractor and host of a number of shows on HGTV routinely highlights situations where the contractor leaves the home owner high and dry in the midst of a renovation. What they never talk about on the show is that the client low balled the price and a contractor desperate for work or lacking the proper estimation skills took on the project. In a situation like this the major issues start when the contractor asks for more money to keep the project moving along and he is denied. In turn the contractor in order to provide for his family walks off the job part way either cutting his losses or taking the available profit, moving on to another profitable project leaving the client to deal with a partially completed renovation. This situation is more common with independent contractors rather than established contracting companies.
- When a contractor asks for more money this is not always necessarily to continue to make a profit as in the point above or even make more profit. The reality is that projects can always change as renovation clients often wish to make upgrades or alterations to the initial scope or plan. Furthermore unforeseen circumstances can be encountered which far supersede any miscellaneous fund established in the initial price to cover unpredicted challenges therefore a “Change of Work Order” needs to be drawn up and charged to the client. Contractors cannot see through walls. This can turn out to be another sticking point for the budget conscious client and the contractor again leading to a disagreement.
- When the correct price is charged by the contractor it allows them to provide a solid warranty. Nothing is free in this world, so if you seek to pay a contractor the bare minimum and expect them to provide you with a warranty that includes service calls, you are dreaming. Time is money. Good luck trying to get the contractor to come back.
- The correct pricing should also usually mean that the contractor you are hiring has the necessary licenses to professionally operate in the jurisdiction and has the proper insurance in case of an incident. Price obviously does not mean the company is licensed and insured, but it means that the company can afford to pay for these requirements. It is highly recommended that the client always ask their perspective contractor about being licensed and insured.
- Every business has overhead expenses and this is factored into the price to the client. Generally speaking larger more established contracting companies have a higher overhead than an independent contractor and will typically charge slightly more. This should not be viewed in a negative light as more established contracting companies offer a more professional approach including better processes, more resources, and additional personnel to make any project run smoothly. Warranties, certifications, servicing, customer care, and all post project questions and concerns should all be taken care of.
- Finally if the client likes the contractor that they are considering hiring it is imperative that the contractor turn a profit in order to stay in business and offer you their services for many years to come.
Always remember that when it comes to renovations you get what you pay for. Proper pricing promotes a win-win situation encouraging quality work and happy parties involved. As illustrated above, pricing of a renovation has a huge impact on the end result and can be the determining factor between a dream renovation and a nightmare situation.