New Strategy for Contractors after Getting Burnt - Thoughts?

[Chris Purcell]

In Feb 2017, I started my rehab journey, and it has been a complete an utter nightmare/failure.  I've had multiple contractors stall on my 2 jobs and walk off with deposits in hand, and multiple contractors who were incompetent who I had to just tell to leave and cut my losses.

I have learned a lot, but still not being done these projects after 5 months has left me perplexed.  

I need to switch strategies when dealing with these guys, to where they are paid if and ONLY when they get done the work.  Most contractors want a deposit for 2 reasons - so (1) THEY don't get burnt, and (2) for the purchase of materials.

I'm done with deposits - so here's my strategy.  If a contractor doesn't like it - NEXT!

Let's say we agree to a contract price of $60k for a full gut rehab.  Yes, materials are needed and I understand that.  Contractor goes to Lowe's, they pick up materials, Lowe's calls me, and I pay over the phone.  Example - let's say $3k worth of materials - I pay for, now there is balance of $57k.

Now the tricky part is paying for the labor.  My thought is to allocate a ballpark estimate on labor for each activity, so let's say:

When house is gutted to studs - $2,500 (maybe $500 for dump fees upfront)?

Re-framing - $3,000 (materials paid over phone, labor paid upon completion)

Electric/plumbing - $10,000 (materials paid over phone, labor paid upon completion)

HVAC - $5,000 (same as above)

And so on and so on...  This eliminates any money paid upfront for labor, eliminates money NOT going towards materials, and only pays upon completion of certain tasks.

Would like to hear input from contractors on working like this