Managing Contractors' Budget & Schedule

[Matt McCurdy]

In today's labor market, we are all hard pressed to find good, reliable, and affordable contractors to renovate investment property.  I'm certainly not a newbie, but open to ideas on how to handle a delicate/finesse part of the business.

I've had mild success in finding contractors who fulfill the three descriptors above.  When I do find a contractor, I typically find one who makes a mistake (we are all human & sometimes there are communication issues).  Ultimately, the burden is felt by me through a longer renovation time and/or a higher cost to correct the contractor issue.  Does anyone have any strategies/tricks to work with contractors in the time of conflict?  There are two schools of thought I know of:

1) Take the cost/time on my own chin and hope the contractor makes up for it in the future on the next project.

2) Ask for a concession from the contractor to make up for the mistake, but risk the contractor out right quitting or charging a higher price for the next project trying to recoup the cost from the previous project.