Home Improvement – The Ideal General Contractor, Big Company Or Licensed Tradesman?

What’s the difference between a general contractor and a skilled worker in carpentry, electrical, plumbing or one of the other construction trades? One answer is “a contractor’s license.”

Another answer is that a general contractor is a tradesman who at some point asked him or herself the question, “Why am I giving a big portion of my salary to the general contractor when I could BE the general contractor?” They get their license and bingo, a general contractor is born.

Well, there’s probably more to it than that, but the fact is that many GCs did begin as tradesmen and tradeswomen and at some point decided they wanted to run their own business.

In a big construction company, there is a “project manager” that deals with the day to day details of one or more projects. A project manager may or may not be a tradesman but usually does have business management skills. A big company must run several jobs at a time to meet its expenses.

A general contractor who came up as a tradesman probably only has one or two jobs going at any given time.

What do these differences mean to you as a homeowner, you may be wondering.

Depending on your preferences, the size and scope of your home improvement project and your budget, the difference between hiring a small company (essentially a licensed tradesman who is also a general contractor) and a larger construction company can be great.

Each type of company has its advantages and disadvantages.

As a rule, larger companies have greater capacity. They probably have tradesman in all of the various fields on salary. As a result, when it’s time for a particular phase of your construction or home improvement project to begin, that phase is more likely to begin and finish on or closer to schedule.

On the other hand, smaller companies with a reputation for doing good work often have salaried staff as well, or at least, an available pool of skilled tradesman at the ready to come to work on relatively short notice.

Are smaller companies with their smaller overhead more likely to give the lower price?

Although larger companies do sometimes have more leverage on materials pricing and labor costs, in general, it’s probably more likely that a contractor/tradesman will be more inclined to bid lower, especially in tough economic times.

Larger companies have staff, departments and department heads. Bigger organizations, if they are run well, usually lead to a more efficient process. But often, efficiency can be in place of the personal touch.

Contractor/tradesmen, on the other hand, are used to dealing with homeowners. They may be more patient, amenable and even economical with regard to changes you may have over the course of your construction or home improvement. But are they effective managers of time and resources or just good tradesmen? Maybe yes, maybe no.

The bottom line is that when you’re planning a construction or home improvement project, and you begin your search for a general contractor, meet both large and small companies.

Think about your needs, interview a number of prospective companies, large and small, and get a feel for what’s right for you.

What You Should Know Before You Hire A Home Improvement Contractor (Part II)

In my previous post: “What You Should Know Before You Hire A Home Improvement Contractor,” I gave some tips on how to select the right Contractor for your project. Do not become the next victim.

Prior to hiring a Home Improvement Contractor (HIC), make sure to call the department or municipality that licensed that Contractor or business. I encourage you to call the Better Business Bureau also to see if that Contractor have or had any complaints. If you had a free estimate or quote from a Home Improvement Salesman (HIS) representing a Contractor or business, make sure that he or she is also licensed by calling the department or Municipality that licensed that business. Ask for identification such as a driver’s license and HIC/HIS license with a picture. If they don’t have a driver’s license or any kind of picture ID, it is very likely that they are bogus, and you should refrain from letting them in your home.

If you were offered financing through a Bank or a third party lender that the Home Improvement Company recommended, make sure you do not sign or execute any blank documents. Some HIC/HIS may ask you to fill out a credit application so they can check your credit profile to see if you are qualified for a home improvement loan. Keep in mind that such check will show up on your credit report as an inquiry which may lower your credit score. However, if you were advised that you were approved for such loan, make sure you thoroughly read the Retail Installment Obligation. Look at what interest rate you were assigned or charged, the monthly payment, amount of months, and most importantly, the total amount of payment. The total amount of payment is the amount you financed plus the interest added over the months or duration of the loan. You may also want to ask the HIC/HIS if there are any prepayment penalties or whether the loan will be recorded as a second mortgage to your property.

If you are a Veteran or a member of a Credit Union, you may be entitled to a much lower interest rate. Shop around with your banks before you jump for a home improvement loan. Know your rights as a consumer and invoke them accordingly. You have the right to be selective. Let no one pressure or strong arm you into signing a contract. Always take time out to think about it, discuss it with family members, or consult your attorney prior to executing a contract, which you may be bound by once you signed or executed such. In most cases, after the third business day elapsed, if you didn’t cancel, there is a valid and enforceable contract.