@Alex Varner
A long-winded answer, but my thoughts on the topic!
I work full-time as a general contractor in Minnesota (Minneapolis/St Paul market), and a very rough summary of the construction field can be summed up as follows:
"Time, Quality, Price...Pick Two."
(1) High quality, short time frame...high(er) cost.
(2) Low cost, short time frame...low quality.
(3) High quality, low cost...longer time frame.
In my opinion, the best contractors in the marketplace only offer option (1). We provide the highest quality craftsmanship and end product, while coming in on time and on budget. If a contractor is willing to be paid less to take longer to complete a job, that should be a huge red flag (time is money).
I completely understand the bias against general contractors - a big reason I decided to pursue this line of work full-time is because there are so many poorly run companies out there (my wife and I actually had a referred GC disappear 1/2 way through the full renovation of our first home - before I was licensed - and I was left to manage the project through to the end).
That being said, there is also a newer phenomenon I refer to as the "HGTV effect". Reality TV shows related to renovation make things look like they take way less time (and cost way less money) than they actually do. In addition, most shows don't share the market in which the work is taking place (labor rates vary dramatically between MN, GA, AZ, etc). This leads to unrealistic expectations for pricing, timelines, etc.
There is a strange preference toward cheap contractors (especially on investment properties); however, think of a general contractor as you would any other professional. Do you ever look for the lowest priced doctor, attorney, CPA? Yes, you need to be price sensitive to a certain extent, but you also "get what you pay for". We are not the cheapest company in our market; however, we also guarantee project budgets up front (with the exclusion of changes in allowance amounts spent, unforeseeable code/safety-related issues, or client changes in the overall scope of work), complete 99% of our projects on time (or ahead of schedule), and constantly respond to calls/emails (even if the calls are to berate us for something). Plenty of contractors do the complete opposite - bid low and send change orders constantly to get to the same price point at the end, all while avoiding phone calls and dragging on timelines.
Some will suggest providing materials directly, completing some of the work personally to cut cost, etc; however, many professional contractors (I am one of them) will not allow clients to provide building materials or complete work on site. Contractors are able to get discounts on building materials, so even if they "mark-up" their discounted materials, the price is oftentimes the same as (or better than) your price through Home Depot or the local lumber yard. That mark-up also covers all aspects of the order (delivery to the job site, returns of extra materials, replacement of faulty materials, re-orders when specifications change on the fly, etc). Similarly, we know our crews and how long their work takes. If an owner is allotted 5 days to paint, but takes 8, that creates a domino effect for the remainder of the entire project, and can delay completion by upwards of 2-3 weeks (most crews in our market are booked for the next 2-3 weeks at any given point).
The best contractors will also honor their warranty requirements (in MN that's 1 year on cosmetics, 2 years on mechanicals (HVAC/electric/plumbing) and 10 years on structural defects). If we're going to cover those types of warranties, we have to be certain we trust the quality of all materials being installed/utilized on each job site we're running, and that we know our crews are completing all work (and as a result will come back to fix things for free, within warranty parameters). There is too much inefficiency and gray area when you start to commingle material/work responsibility.
To cover your initial question, our standard payment schedule includes 5 equal payments - 20% down, 20% x 3 at project landmarks specified in each contract (they differ depending on scope of work) and 20% upon project completion. For us, "project completion" is defined as the date when all work is complete, all inspections passed and permits officially closed, and the final client walk-through is complete and approved (we complete a preliminary walk-through in the last week of the project to blue tape any remaining issues and create a running "punch list" that is shared with our clients so everyone is on the same page). There can be one item that will take 5 minutes to fix, and we will gladly leave the final payment (which can be in excess of $20,000) outstanding until it has been remedied.
What I emphasize to all of our potential clients is that the client/contractor relationship is very intimate. You will hire very few professionals who will work with you on a daily basis for weeks (sometimes months) on end, and also directly impact the value of some of the largest investments you will make in your lifetime. If our working style doesn't seem like a fit, or our prices do not meet expectations, the last thing we want is for a potential client to sign on the dotted line. It has to be a fit for both parties, or the project will not be a success.
My recommendations for vetting contractors?
(1) Visit current job sites (check things like productivity, job site cleanliness, quality of work)
(2) Visit completed job sites (to see a finished product in person - pictures can skew reality!)
(3) Require 3+ references, and reach out to them (anyone can provide a list of names, and few people ever call after receiving the list)
(4) Require proof of insurance and ask to be listed as "additionally insured" (you will be notified if the policy is modified or canceled)
(5) Require proof of licensing and permitting (many contractors will say permits have been pulled when they haven't)
(6) Research the company, owner, etc thoroughly online - you can learn a ton (social media, google reviews, Better Business Bureau, etc)
(7) Trust your gut. If something doesn't feel right, it probably isn't. It's better to delay the project a few weeks than move forward with the wrong company.
(8) Once you find a great contractor, have open and honest conversations with them about what is working and what isn't. If you're looking for a long term partner, treat the relationship as such and you will be amazed at the results.
Best of luck with the hiring process!
