You have designed your new building to your specifications and now comes one of the most important decisions in the entire process: choosing a contractor or builder to make it a reality.
Start with Reputation When Choosing a Builder
Hiring a builder both you and your architect feel comfortable with matters, but it is far from the only criteria. Reputation is paramount. Do former clients speak highly of the builder? Has the builder ever been reported to the Better Business Bureau? Can you visit completed projects and speak directly with the owners?
Beyond reputation, consider the builder’s area of expertise. Residential, retail, healthcare, manufacturing, and high-rise construction each require different experience and skill sets. Make sure the builder’s specialization aligns with your project type.
Licensing is equally important. In many states, different contractor license classes limit the type and value of construction a builder may legally undertake. Verify that any builder you consider holds the appropriate license for your project’s scope and location. Many states publish contractor license information and filed complaints through their official licensing board websites.
Narrow Your List of Builders to Three, Then to One
Once you have done initial research, contact your top three candidates and schedule a meeting with each. Where possible, include your architect and project manager. Ask each builder to bring their sales representative, expected project manager, and billing manager. Always follow up with additional research based on what you learn in each meeting.
Engage a Construction Attorney Before You Meet with Any Builder
Before sitting down with any builder, it is strongly recommended to retain a contract attorney with construction experience. Your attorney can ensure you are properly protected throughout the building process and should flag key contract terms to raise during your meetings, such as retainage, completion date penalties, and payment structures. Ask whether your attorney has prior experience with any of your three candidates and whether those experiences were positive or negative.
Managing a construction project also involves significant financial planning. The project management and CFO services offered by Consult Your CFO can help ensure your construction budget stays on track from groundbreaking through completion.
Key Questions to Ask Every Builder
At a minimum, cover the following during your meetings:
- What experience do they have building the specific type of structure you need?
- Are they licensed in the state where construction will take place?
- Which roles does the builder handle in-house versus sub-contract?
- Will a dedicated project manager be assigned? How long have they been with the firm and what are their credentials?
- What is the internal escalation process for resolving problems?
- What is the builder’s fee structure, escrow arrangement, payment and release of funds process, and billing documentation requirements?
- What is the projected completion date? Can the builder realistically meet your timeline given their current project load?
Make clear from the outset that you will have your own project manager assigned to the project.
Check Builder References Thoroughly
Request a list of recent references specific to your type of construction. Contact each reference and arrange a walkthrough of the completed building. Ask how and why they chose the builder, what went well, what issues arose and how they were resolved, and whether there were any billing concerns. Ask open-ended questions and let the owner do most of the talking. Their candid experience is invaluable.
You can also check the BBB contractor search for any complaints filed against the builder.
Do Your Homework Before Construction Begins
Choosing a contractor is not a decision to rush. This is someone you will work with closely, often daily, throughout a complex and costly project. The more thorough your vetting process upfront, the better protected you will be once construction is underway.
For help managing the financial side of your project, including budget oversight, cash flow planning, and payment controls, contact Consult Your CFO to learn how a fractional CFO can support your construction project from start to finish.