Best Practices for Contractor Qutoes, Payment and Change Orders

[Jeff V.]

I'm curious if someone with experience with dealing with contractors successfully could provide some tips and best practices for dealing with them.

Quotes:  To date we have been getting quotes on labor and timeline for our renovation projects and paying for materials directly.    Is this the best method, or should we be getting fixed/firm quote for Labor, Materials and Timeline?

Materials Procurement and Pickup: My business partner and I work full time so we established a credit account for the contractors to use when picking up materials and we pay that off monthly.  I'm sure this is not the best way being the results I'm seeing is the contractors buying way more materials than are required for the job and buying tools and equipment on the account when not authorized ect...  We end up eating the cost of things like nails, putty, caulk, buckets, paint pans, rollers, putty knives, trowels ect due to waste and the tools ect walking off with the contractors.  We end up returning $1000 - $1500 in excess materials when we do the final cleanup and recoup some costs.  There has to be a better way to do this piece.  What are you guys/gals doing for this section as a best practice?

Payment:  We have been taking the total labor cost from the quote dividing that evenly over the number of weeks required while holding out $1000 for the final punch list payment.  The holding out of $1000 has been a positive change to keep the contractors motivated until the end of the project.  I'm not sure that the weekly payment structure works best due to Chang Orders that pop up and extend timeline and cost more in labor...   Do you have best practices for the Payment portion?  Do you pay weekly or half up front and half on completion?  What way has worked best for you?

Change Orders: We have been getting a quote for labor on change orders and once the original timeline has been passed we total up the change orders and see how far behind schedule we are then start weekly payments based on the new remaining balance...  example 3k in change orders that put us 3 weeks behind would be 1k per week for the next 3 weeks.    I'm sure this can be smoothed out by suspending the original weekly payments until the change order is complete, paying the change order labor and then resuming the original weekly payments.  What are your tips for best practice on handling change order process?

Last thing is Firing Contractors...  The last project we done we had a contractor that started off good with the rough work, but was horrible at the finish work.  He had absolutely no attention to detail.  Virtually everything he touched with regards to finish work, I've had to hire another contractor to come in and fix.  How do you go about firing a contractor and terminating the contract....  How are the final payments handled ect?  What are your best practices on this?

I would welcome any information on these things.  We've managed to do well despite these inefficiencies but I hope to improve these processes going forward.

Thanks for any and all information!

Jeff V