8 Questions You Should Ask Before Hiring a General Contractor

You’ve asked around, you’ve checked references, and now you have a short list of general contractors to choose from. How do you narrow down that list to one?

Here are the top issues to ask about before you pay a penny:

  1. Bondable? Ask prospective contractors to provide pricing for a bond and information on their bonding company. Typically, a bond costs 1% of the contract price. You won’t necessarily purchase the bond, but knowing that your contractor can secure a bond from a reputable bonding company helps to confirm the contractor’s financial stability.

  2. Well-Insured? Request a sample certificate of insurance. You want the policy to be issued by a reputable insurer with coverage limits adequate for your job. Make sure you can be listed as additional insured, and run the certificate by your own insurance agent.

  3. Agreeable? Confirm that the contractor is agreeable to using the AIA (American Institute of Architects) suite of contract documents, an industry-standard set that balances the interests of all parties. Ask the contractor early on to raise any objections to contract language to avoid surprises later. Because AIA documents are commonly regarded as fair, contractor-requested changes or objections to the standard form of agreement should raise a red flag.

  4. Payable? Confirm that the contractor will follow the AIA pay request procedures. Ensure the contractor’s agreement to a fair retention (10% is industry standard) and to your paying for work when it is completed with no down payment. Payment for stored materials should be allowed only after you have inspected the materials and received written confirmation that that are being stored in an insured warehouse.

  5. Fully-Attentive? Confirm that the contractor will provide full-time on-site supervision. Don’t accept your project being overseen by a general superintendent who is responsible for multiple jobsites. There should be one dedicated foreman for your project.

  6. Subcontractors? Ask for a list of the subcontractors the contractor intends to use, and do some due diligence to research those companies on your own. Subcontractors typically perform 60–80% of the work, and it just takes one bad sub to sink a job. A contractor’s choice of subcontractor partners can signal whether quality really matters.

  7. Project Manager? In addition to the on-site foreman, there should be a project manager who handles the office issues. Ask who will be your main point of contact in the office. Watch out for having to deal with multiple departments. Your life as a project owner will be much easier with a designated primary point of contact.

  8. Design Assist? Ask contractors if they include “design assist” services at no extra cost. Specifically, will they work directly with the architect to budget the project from the earliest stages of design through the final contract documents? The design assist process (versus the traditional low-bid approach) allows you as the owner to benefit from pricing transparency, cost-saving design alternatives, and elimination of most unpleasant budget surprises and expensive change orders.

The success (or failure) of your commercial construction project will impact the future of your business for years to come. Don’t be afraid to ask prospective contractors any question that’s important to you, because a contractor of choice will understand the importance of your investment and of earning your trust.

By Colin Yoshiyama, President of Constructors Hawaii, Inc.