The Book on Flipping Houses assures us that building a relationship with a contractor team that is effective and profitable is ‘perhaps the most difficult part of this business’. As I prepare to identify and interview contractors, I’ve reviewed TBoFH’s Chapter 15 as well as a variety of other blog posts to prepare my master list of questions.
The list I’ve developed is very much in its first revision. It is said that no battle plan survives contact with the enemy. I don’t, of course, consider contractors to be enemies or adversaries. However, they are counterparties in addition to being project partners. So, I must both be prepared to do earnest, pragmatic due diligence in establishing the relationship and simultaneously maintain a sense of zen about the realities of applying a checklisted set of intentions to a real-world interaction. I expect this list will see significant review as I engage with my local contractorati.
- Business Experience
- How long have you been working in contracting?
- How long have you been working under this business name?
- Have you operated a company under a different name?
- Have you ever had to file for bankruptcy as a business entity?
- Do you have experience working with investors?
- What are your strengths relative to your competitors?
- What type of projects do you specialize in?
- What type of projects do you decline?
- How many projects do you deliver per year?
- How many projects are currently under way?
- How do you decide when to cap the work you can actively manage?
- What is your corp structure? (SP, LLC, Corp)
- How many employees?
- How recently have you hired or fired an employee?
- Licensure / Insurance / Bonding
- Are you licensed as a GC in GA?
- What is your license number?
- Are your HVAC/Electrical/Plumbing subs or specialists licensed?
- Can you provide their license numbers?
- What kind of insurance do you carry?
- Needs to be General Liability and Worker’s Compensation
- Need to see a copy.
- What are your insurance limits?
- Do you carry the state minimum 25K surety bond?
- Contracts
- Can we see a sample bid you’ve submitted for a different contract?
- How do you prefer to structure your bids? Fixed Price? Cost Plus? Other?
- We expect to execute an IC agreement, W9(s), a detailed SOW for the project, a payment schedule agreement and and Insurance and Indemnification agreement before work begins. Any issues?
- We expect to execute a Lien Waiver prior to final payment after punchdown is complete. Any issue?
- How do you warranty your work?
- Can we review a copy of a previous warranty you’ve provided?
- Have you had legal disputes on any previous projects?
- If so, how were they resolved?
- Have you ever filed a lien against a client?
- Quality of work
- Do you have an active worksite I can visit?
- We would like to review 3 recent references.
- Similar work scope is ideal.
- Subcontractors
- Do you use subs on your projects?
- Does your insurance cover your subs?
- Please provide references for your subs or contact information so we can seek references.
- Work Progress
- Will you consistently be onsite?
- If not, how often?
- Will you use a project manager?
- Who will be the site supervisor in your absence?
- How do you prefer to provide work progress updates?
- How do you organize, cleanup, and secure your jobsite?
- What steps do you take to ensure worksite safety?
- Have you had to handle any worksite accidents?
- What is your process for managing a worksite accident?
- Expectations of the Customer
- What are your expectations of the customer?
- What can we do to best facilitate your work?
I have to assume that this is an ambitious amount of information to seek. Figuring out which parts are hard requirements vs nice-to-haves will be part of the adventure.
A contractor who commented on one of the blog posts I reviewed while developing this list said, “…some of the best contractors I know drive beater trucks and don’t put a lot of effort into their personal appearance they don’t dress nice or worry about any of that but they’re excellent master craftsman. On the contrary I’ve worked with companies that have all brand new freshly painted trucks everything looks immaculate and the people who work there don’t have a clue.”
I think this is important context for applying a list like this to the real world. This list is a tool that helps you get to know a person – it may not be practical to view it in a completely pass/fail context.