Many homeowners elect to hire a home renovation contractor on an hourly rate basis, and many such contractors prefer to work under this arrangement due to the unpredictable nature of projects in the domestic environment, particularly when demolition is involved. An hourly rate agreement safeguards the homeowner from inflated bidding, and ensures the contractor gets paid for the work they do. If you decide to go this route, you may think there is nothing more to be discussed once the design is agreed upon. $40/hour. Simple, right? Not necessarily.
Here are some things you may not have thought of:
1. Check References
Don't settle for "A buddy of mine does this kind of work," as an acceptable reference. Get two or three names of homeowners for whom the contractor has worked in the last 12 months. Call them and have a frank conversation about any items of concern. Be willing to shop around if there are significant red flags.
2. Transparency & Accountability for Time, Expenses
You need to feel comfortable that your contractor understands your expectations for the project and process; and, you need to have a clear plan of communication if you are paying for every hour worked and every box of screws purchased.
OPEN RECORDS FOR TIME & EXPENSE?
Set up a system for your contractor to log time & expenses; and a schedule for making payments; and how it will all get documented.
EXPENSE MARKUP?
Is your contractor going to round every purchase up to the nearest $100? Are they going to add a 10% markup? Your contractor is probably still "on the clock" during trips to the hardware store. Do you want copies of every receipt from every purchase?
3. Close-Out Expectations
What does a finished project look like to you? Is your contractor going to pick up trash, dust, sweep, and mop? Will they come back and fix any glitches you find?
PUNCH LIST ON WHOSE TIME?
If a project was bid for a fixed fee, we would expect the contractor to come out and fix any aspects of the project that the Owner is not satisfied with at no additional cost. However, this is a gray area with hourly rate contracts.
WARRANTY PERIOD?
Again, for fixed bid construction we expect a 12-month warranty period during which the contractor will come out and fix anything they did that breaks or stops working. Is your hourly rate contractor willing to do that?
4. Over-Estimate Time & Cost
Expect everything to take twice as long as projected. Seriously. Expect everything to cost 1.5 X the original budget.
5. Include the Occupants
Home renovation projects are MESSY. Make sure your spouse, family, and/or tenants are in the loop as far as what to expect. Set up and maintain clear boundary expectations and lines of communication for those living in the house, and those working in it. Don't get stuck in the middle of conflicts that could have been avoided by clearly communicating boundaries beforehand.
Designing a renovation to your house can be fun; but it is also fraught with opportunities for stress, disappointment and miscommunication. Not to mention there is a lot of money at stake. Try to enjoy the process and let us know if you come up with any tips of your own.