Choosing a competent contractor to complete a planned or unplanned project is more difficult now than ever before.

In today's economic climate, often inexperienced contractors might be eager to submit proposals for projects. Whether it is a roofing, siding, window replacement, façade restoration, or a waterproofing project, simply assuming that all contractors on a bidders list are equal can lead to trouble and possibly create more headaches than anyone expected.

During these difficult economic times, contractors, to be more competitive, have thinned out their organizations and eliminated resources that they feel will make them more competitive. However those resources could be the same ones that allow a project to run smoothly without interruption, provide solid warranties, and finish on time. Having a plan to evaluate the contractors on more than a gut feel is a good idea and could save you money, time, and potential serious problems.

Check Qualifications Before Hiring

Factors to consider when hiring a contractor include the contractor's qualifications, financial stability, insurance, warranties, bonding, and references. Some of the key qualifications that a contractor should be able to provide are:

• Proof of appropriate licenses for the proper jurisdiction.

• Examples of their management, administrative depth, and experience in the particular trade being contracted.

• Proof that they use their own employees with a skills training manual.

• If subcontracting is part of the project, then a complete list of subcontractors with the same requirements that are expected from the prime contractor.

• The number of completed projects or years in the industry working with revenue-generating, occupied structures (very different than new construction).

• Evidence of a drug-free workplace including a written policy to evidence its existence and a compliance affidavit listing the testing lab and random testing compliance.

• An Experience Mod Ratio, which requires a letter from worker’s compensation carrier documenting ratio. This is calculated each year on claims made; if the ratio is high (over 1.35), it could be indicative of a poor safety record.

• An OHSA 10 card issued to individuals by the Department of Labor that is in their possession on the job site.

• Proof of an independently audited safety program.

• Proof of a comprehensive work and communication plan that contains production schedules and job site safety plans.

As we all know, many businesses are closing their doors because of poor cash flow, slowing business, or credit issues. It is important these days to ensure that the contractors you work with are financially solvent. You have a right to request the following:

• An independently audited financial statement for the company.

• Their financial backing and credit status.

• A description of how they handle their account payable submittals. Speak with some of their key suppliers to make sure they pay their bills timely. If material suppliers are not paid they can levy a lien on the property.

Insurance, Warranties & Bonding

It's very common to ask to be listed as additionally insured on the contractor's insurance policy, however not many ask anything else such as, "What does your insurance policy cover?" If you read some of the personal injury judgments that have been awarded to people that have been injured on a work site, it is not uncommon to see the awards of $5 million dollars or more.

Depending upon the type of work you are contracting for, the following should be included in the policy:

• A general liability policy with a "care, custody and control" endorsement, and an adequate worker’s compensation policy.

• An umbrella policy with a "care, custody and control" endorsement (when workers are suspended from height, the potential liabilities are dramatic, so it is important to request a substantial amount of umbrella coverage ($10 million of coverage is becoming standard).

• Separate mold and pollution riders—Not included in most liability policies, must be separately bound.

• No EIFS exclusion from G/L policy—Not included in most liability policies, must be separately bound.

Most substantial projects have warranties associated with the materials used and possibly the associated labor to install the materials. However, few make sure that the chosen contractor has the ability to attain the specified warranty from the materials supplier.

Your contractor should be able to provide:

• Proof of the company's ability to obtain a warranty for the specified materials prior to the work commencing. (Is the contractor a certified installer of the specified material from the manufacturer?)

• Job references where the contractor has applied the specified materials, as well as any material application certifications where appropriate.

• A clear description and sample of their labor warranty (should be obtained prior to contracting the job).

A company's ability to provide a bond can be a key factor to ensure a project is completed per the specifications and in a timely manner. Require a letter from the carrier stating the company's ability to bond the job along with its bond rating.

Carefully Review References

One of the key indicators to whether or not the contractor chosen will successfully complete the project is its past performance. What do previous customers think? It is relatively simple to ask for reference lists from the contractor. Instead of getting three references, simply ask for twenty. However, take the time to call the references. This is a task that can be delegated out to a subordinate with a script that can be easily created. It may be relevant to ask for completed jobs from 3, 5 or 7 years earlier, and to find out how the contractor handled warranty issues. In the contracting world, the best predictor of future success is past performance.

Today's economic climate makes it more imperative than ever to perform a comprehensive analysis before selecting a contractor. There's no 100 percent guarantee that every project will go as planned but by spending some extra time up front you can minimize the chance of a project going poorly.