It’s always important to know what you’re buying. When you buy something at a store, you get the hands-on experience of seeing its size and how it looks, feels and works. You leave the store knowing what you’ve bought.
When you agree to pay for renovation work, though, it’s up to you, your architect and your contractor to agree on what will be built. This can be difficult, because the “product” you’re talking about is something that’s never been built and doesn’t even exist yet except in everyone’s minds — and in documents.
And it’s the latter that will make all the difference in understanding what you’re paying for. Typically, when you contract for residential construction work, the documents for plans, scope of work and specifications can help define the work to be done so that you can be sure what the finished project will look like and include. Understanding these documents will help you feel confident that you know what you’re buying.
1. Contract - This protects all involved parties. Just because you had a great conversation during the first meeting, and even though the work is only supposed to take two days, you'll regret not having a contract if one of you forgets half of that great conversation.
2. Insurance. Injuries can occur on a construction site. If the location is your home and your contractor does not have the proper insurance, you may be held liable. Make sure the contractor carries the appropriate worker’s compensation insurance and check with your insurer for the proper amount of liability insurance.
3. Scope of work. There are many details to get right in a renovation, write everything down before work begins. For example, if your designer has drawn up detailed plans, make sure the contract references the designer and the date on the plans.
4. Duration of work. Though projects can take longer than predicted for many legitimate reasons — some caused by the homeowner and some outside the contractor's control — the expected project duration should be in writing. The important thing is not that your contractor shows up every day, but that he finishes the project on time. Having a timeline will help calm your nerves if progress hits a slow spot.
5. Exclusions. A good contract should include a list of exclusions. These might be related to areas that will not be visible until the walls are opened up, or the level of cleaning you should expect after work is complete. It’s impossible to know whether asbestos might be found, so talk to your contractor about a potential contingency budget.
6. Payment schedule. These can vary by job, but should always be agreeable to both parties. In my opinion, payments tied to milestones in the project are better than those tied to percentages of completion. As long as you are confident that you're not paying for significantly more than what's been completed, you should be OK.
Other basic information that should be included:
- what the contractor is responsible for doing, what work you will do yourself or have another contractor do;
- if sub-contractors are used, who is responsible for hiring, paying and ensuring work is done properly;
- who obtains building permits and inspections
- amount to be paid to the contractor for the work
- what warranty the contractor provides for the work
The contract sets out basic business requirements the contractor must meet in order to protect in the event of an accident and to comply with the laws in your province. To do this, the contract should specify that your contractor:
- has adequate business liability insurance
- is enrolled in the provincial Workers' Compensation program
- has a Business or HST Number
- has a license number if your municipality requires contractors to be licensed
The contractor should also warrant that any sub-contractor they engage to work on your project also meets these business requirements.
Making sure you have a comprehensive construction contract and reading it before signing the contract are the most effective way to ensure that you will get what you think you are paying for.
Sue Wastell is the president of the London Home Builders' Association and Owner of Wastell Homes in London.