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Business Law: Revealing General Tips about Working with General
Contractors
By Nina L. Kaufman, Esq
"Sallie" was nervous, but excited. She had found the
perfect space for her growing PR firm - near the center of town in
an area that wasn't yet high-end (so the rent was still affordable),
but up-and-coming, with a vibe that fit her creative personality.
The raw space had a lot of potential, and the designer's plans made
it seem fabulous. The contractor the designer had recommended wasn't
available for the work, so he recommended a buddy. They agreed on
the specs and the contractor went to work. Six months later, the
contractor still wasn't finished with the work that should have
taken two, Sallie's landlord was v-e-r-y displeased. . .and Sallie
was still out of a "home" for her business with no end in sight.
What could she have done differently?
Short of dealing with a lawyer, there are few
relationships that inspire more dread and trepidation
for business owners than working with a building contractor
(building a sophisticated website probably ranks up there, too). Get
a handful of people in a room, and you'll have nightmare
stories to keep you occupied for a month! Shoddy
workmanship, ballooning budgets, cut corners - all raise the hairs
on the back of your neck, because they all mean lost profits, missed
opportunities, and a total disruption to your business rhythm. Here
are the top five (5) guidelines that could have
helped Sallie minimize her risks:
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Don't hire a pig in a poke.
Rather than relying on the original contractor's recommendation
alone, Sallie should have done her homework. This includes
getting references from at least three people who have used your
contractor. If possible, visit the job sites. Ask the contractor
for projects completed within the past 2-3 years to see whether
hidden defects surfaced after the work was finished. Also,
investigate whether any complaints against your contractor have
been filed with the Better Business Bureau, Department of
Consumer Affairs, and/or Attorney General. Find out if the
contractor has been involved in litigation, as this may show a
history of dissatisfied customers. If you can, obtain a credit
report to see if your contractor is solvent.
-
Find competent advisors. It is
essential to hire both a lawyer and an architect (or designer)
who have experience dealing with these kinds of projects. Why?
Because many contractors either do not use formal contracts or
use form contracts like those from the American Institute of
Architects (referred to in the industry as "AIA Contracts"). By
their nature, AIA Contracts leave a lot of items open-ended --
where you either need to supply information or choose among
options. Your architect/designer can ensure that your agreement
with the contractor specifies the project scope in sufficient
detail; your lawyer can ensure that the contract adequately
protects you, should all not go according to plan.
-
Be crystal clear in setting
expectations. Vagueness is the primary reason that so
many relationships with contractors go awry. Be sure that you
and the contractor agree on: the scope of the project; work
deadlines; the total cost of the project; what will and will not
be considered "extra costs"; the timing and amounts for
installment payments; who decides when installment payments are
due; and when interim inspections occur and who makes them. Most
importantly, be sure to discuss what will happen if the
contractor does not perform as promised - either in terms of
quality of work or time frame for completing it. This is an area
where Sallie could have protected her "down side."
-
Obtain landlord approval. Most
commercial leases require landlord approval for any alterations
to your premises. Therefore, make sure that your
architect/designer provides the landlord with the same detailed
project scope that will be included in the agreement with your
contractor. Be sure that all significant parts of the job are
included, because your landlord may approve your initial plans
but refuse to approve something you want to add later to the
project. Also, confirm whether the landlord will require
building permits -- even if your alterations generally wouldn't.
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Keep your eyes and ears open.
Your architect/designer should visit the project frequently to
ensure that the work is proceeding as scheduled and the
materials meet the quality required and promised. Be sure that
all plumbing and electrical work is properly inspected before
the contractor covers it by walls or cabinetry. Check to see
that there are sufficient workers on site to complete the work
timely; inquire whether all workers and any sub-contractors are
properly licensed and paid timely, as the failure to do so can
embroil you in litigation or other costly delays. Do not be
afraid to ask questions of your contractor, as it's crucial that
you stay informed and closely supervise these kinds of projects.
Be sure that you understand the answers your contractor gives
you.
Expect the unexpected. No matter
how well you follow these guidelines, things can and do go wrong.
Build flexibility and cushion into both your budget and your
deadlines so that you can plan for any hiccups that may arise - and
keep the nightmare at bay.
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© 2004-2009 The Legal Edge LLC. Nina L.
Kaufman, Esq. is an award-winning business attorney, author,
and speaker. Under her Ask The Business Lawyer umbrella,
Nina offers easy-to-understand business law resources that
protect small businesses and save them money. To learn more,
and receive our FREE "LexAppeal" ezine, visit
http://www.GreatBusinessLawTips.com or contact
Contact Us. This article is for your
general information only. Be sure to consult with an
attorney regarding your particular situation to make sure
you get the specific advice you need.
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Nina Kaufman, Esq.
Award Winning Business Lawyer, Author & Speaker |
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