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Negotiating Contractor Services

What services can you expect from the professionals you hire to design and build your custom home? The short answer is: whatever you negotiate. The job description of an architect or builder can vary wildly from project to project &mdash an architect might simply be hired to draw up blueprints and pass them off to […]
by Billy Fox
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Negotiating Contractor Services

What services can you expect from the professionals you hire to design and build your custom home? The short answer is: whatever you negotiate. The job description of an architect or builder can vary wildly from project to project &mdash an architect might simply be hired to draw up blueprints and pass them off to your builder, or he might shepherd your project from beginning to end (helping you select a site, assembling the construction team and managing the actual construction).

Your builder might serve as a general contractor, overseeing the entire job, hiring and coordinating all subcontractors, and taking responsibility for meeting onsite with building officials. Or he might simply be another subcontractor under a separate general contractor. There simply is no hard and fast job description for any of the major players in a custom home project.

That said, there are some general rules of thumb for what you can expect from the professionals you hire.

  • Each should have a solid track record and immaculate references.
  • Each should be easy to deal with on a personal level.
  • It’s also reasonable to expect that agreed-upon deadlines will be met (allowing for unforeseen delays such as bad weather or "discoveries" like bedrock or underground water).
  • Good-faith efforts will be made to stay within your budget.

During initial meetings, design and building professionals should be flexible and diplomatic. It’s fair to assume that their behavior in the planning stages will offer insights into their subsequent conduct.

Interviews and Negotiations

Before interviewing prospective professionals, you should have a clear idea of the duties you wish to assign to each party, but you also should be prepared to balance this with the predisposition of each professional.

While you might wish your architect to take an involved, managerial role, his or her practice might prefer to simply provide designs and avoid construction management. The reverse might be true, and your architect might want to take an extremely active role. You may wish to serve as your own general contractor and hire a builder for just the erection process, but many construction companies insist on controlling the selection and scheduling of subcontractors.

Being deeply involved in dictating the job responsibilities of your project can be a double-edged sword &mdash it can save you money and allow you to assemble a dream team, but it can also cause friction among team members that will be working together for a year or more. In other words, you should choose your battles wisely, because some professionals might not want to work with a client that is perceived as a micromanager.

Contracts

Contracts should specify the responsibilities of each professional, thus minimizing misunderstandings about the services that each is required to provide.

You can expect a relatively pain-free contracting process with your architect, as a great number of design professionals base their language on the sample documents created by the American Institute of Architects. The mission of the AIA is to not only protect its members’ interests, but also to insure that they follow a strict code of ethics and conduct; as a result, these contracts, which are proven in court and backed with precedence, are generally beneficial to all parties. Negotiating the fees for your architect’s services also should be straightforward, as the AIA has established fair standards on every possible phase (site selection, meetings, designs and so forth) of an architect’s practice.

Conversely, general contractors are known to work on everything from a handshake, to a handwritten one-page agreement, to a highly detailed legal document. The National Association of Home Builders encourages its members to use legal contracts, and publishes manuals that provide sample language that an attorney can use as the basis for a sound contract, but you’ll still likely encounter very little standardization of language as you meet with potential builders.

At a minimum, your agreement with a contractor should specify the start and completion dates of your job, the pricing structure and the payment schedules you must adhere to. A good contract will also stipulate exactly what aspects are covered by warranty, and it will provide termination procedures in the event of a breach of contract &mdash this protects you if you obtain evidence of shoddy work, and protects the builder in the even of nonpayment by clients.

Budget

Many architects and general contractors will try to increase their responsibilities in order to multiply opportunities for billing and markup.

Architects and builders often want to hire and coordinate all the subcontractors, but you should be able to wisely hire surveyors, landscape architects, interior designers and certain other subcontractors.

In specialty markets such as log and timber frame, some architects tend to take the position that they are uniquely suited to finding rare or specialized materials. This may or may not be true &mdash if you’ve done your research, you should be competent to locate and prudently purchase items such as hardware, appliances, lighting and furniture.

You should be very clear during the planning stages about which services and materials you want to assume responsibility for, and you should not allow yourself to be intimidated into relinquishing control by your design and construction professionals.

A dramatic way to save money without compromising the scope of details of your project is through careful consideration of how your professionals will be paid. There are many options to consider, so this is an area that merits legal advice.

The most basic method is a fixed-price payment for the total job. Other options include the cost of the project plus a fixed price, or the cost plus a fixed price up to some finite amount.

A cost-plus approach will often be done on a cost-plus-percentage basis, and this percentage can vary &mdash for example, your builder might receive different percentages for the costs of labor, materials and change orders. By working with an attorney to arrive at a fair system of payment you can avoid being over-charged for you professionals’ services.

Exit Strategies

Your contract should specify means for extracting yourself from a bad situation; there should be an exit strategy in the event that your general contractor is unable to make deadlines or to stay within budget, or if your architect designs a home that simply does not capture your vision.

Some professionals prefer to charge a penalty for terminating a contract, while others allow the client to pay for services up to receipt of a written notice of termination. If the contracts offered by your professionals do not clearly provide for an exit strategy, you should have an attorney draft suitable addendums.

Your contracts should also consider ways of rectifying a bad situation. This protects both you and your professionals from acting rashly or on a whim.

Published in Country's Best Log Homes
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