22

May
2020

5 Steps to Switching Contractors

Is your builder driving you crazy? this blog walks you through steps to switch contractors.

In any housing economy where there is a shortage of high caliber builders we often see quality spiral downwards. As more folks look to the building industry as an opportunity to make a quick buck, the more problems and call backs we see. While there are thousands of highly qualified building companies around the Bay Area, there is definitely still a shortage. And given the recent years of catastrophic fires that devastated thousands of homes, is it any wonder that many that swung a hammer in the past have seen an opportunity to jump in on the housing construction industry?

Quick Buck

While many are well meaning, in the Bay Area we are not short of the fly-by-nights and “quick buck” guys that see a way to make money quickly. Unfortunately this is often at the expense of an unsuspecting homeowner. Even the “best” of them often find themselves in over their heads and frustrate clients with delays, added costs, and mistakes. When a client finds themselves in this position during construction, it can often feel overwhelming and extremely frustrating.

Rarely is a construction project absent of the odd misstep or schedule delay. After all there are thousands of parts and hundreds of people involved building a home that is often custom (i.e. never been built before). But repeated issues, repeated delays, poor communication, and surprise added costs over and over should not be the norm. In this case, the homeowner has every right to stop and re-evaluate the relationship.

If a homeowner does find themselves at this point, we recommend to take a pause and have a serious conversation with the contractor. Create a reset of expectations and re-establish clear and written commitments.

If the project is at the point where it’s obvious that quality is at stake, the budget is going haywire, or the timeline is way off, it may be time to consider switching contractors. While it may be tempting to try and stick it out and see the project through with a “better the devil you know” attitude, the client may be better off mentally and financially to pull the plug and fire the contractor.

But how hard is it to switch builder’s mid-stream?

Surprisingly not too difficult if the strategy is approached in concert with a reputable firm.We at Earthtone have taken over a number of projects under such circumstances (like this one) (and this one) , and we have a five step plan that works to get most projects back on track:

  1. Make sure your contract has a termination clause. Most contracts do, but even without one you should have legal basis to terminate based on breach of contract if the contractor isn’t fulfilling obligations. Check with an attorney here. Do not make any further payments to the contractor until all issues are resolved and potential liens are cleared. A homeowner may not find out for many weeks or even months if there are outstanding financial ramifications.
  2. Select a contractor with experience in taking over projects. Then have the new contractor conduct a thorough audit of the project status, the financial status, and the inspections and permits history.
  3. Next the contractor will need to evaluate everything that has been done, checking for adherence to plans and details, local code; and of course structural specifications, waterproofing and drainage details, etc.  Required corrections should be thoroughly documented and where possible an estimate to remediate issues should be prepared. In some cases, an estimate may not be possible if things are hidden.
  4. The contractor will also help audit the subcontractors and suppliers to see who has been paid and what’s outstanding. He will also make an analysis of those vendors and check their suitability to complete the project. Ideally the more that can be retained the better, but if a sub is part of the problem they’ll need to be culled.
  5. Once a thorough audit has been conducted, the new contractor can provide a thorough estimate to complete the project. Should all be in agreement, a new contract can be written and the new contractor will get you back on track.

Obviously there are many nuances to this, such as getting the permit records changed and working with your lender to get the financing re-set, and we can help with all that.  But even if you’re not there yet and you just want an opinion or second set of eyes, we are happy to help. Feel free to call for a phone consultation.

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