Tips in Selecting Contractors

After you completed the list of your potential contractors, next is to select your top picks.

Again, we will be assuming that your project is a common mid-cost residence probably ranging from 2M to 6M pesos. Cases might be different on higher or lower cost projects. I am also assuming that projects worth 6M up already is worth hiring a Construction Manager and he is the one handling or assisting the OWNER in dealing with the contractors.

According to what you found out on your initial gathering of infos, give more points to contractors with a good office and warehouse, has proper business documents, and has client references. Narrow down your pick into top 3-5.

Schedule a meeting with these contractors. It is recommended that you are the one who goes to their office since contractors might not accept your invitation if they feel that they have a very little chance of getting the project. They actually know if a Client is just soliciting information from them. Also, another advantage is, you can see and feel how the contractor treats his client and he will also feel that you are serious in considering him thus making him give you further information you need. This will probably be your second visit to their office.

Things to ask on your initial meeting with a contractor:

1. How many on-going projects they have. Actually, the lesser on-going projects they have, the more advantageous to you. Simply because, you don't share attention with too many projects. Chances are, your project will have the most out of the contractor's resources. Although, contractors tend to adjust as the number of their simultaneous projects increases.

2. Ask for reference project. If your project is a 2-storey residential with floor area of more or less 300sqm, ask the contractor of specific finished project with the same description as yours. If he is in construction industry for several years, he should have gotten similar project as yours before. This is to prove that he already has the experience and the expertise perfectly fit for your project.

3. Ask for basic contract terms and conditions. Some items that you should clarify are the following:

   a. Down payment. For these type of project, down payment usually range from 20-30%. Also, it is important to request a Guarantee Bond equivalent to the down payment. This is in case something goes  wrong and the contractor abandoned the project before it even started, you can claim back your down payment from the insurance company. Just make sure that the insurance company is reputable.
   b. Construction and Surety Bond. Aside from the Guarantee Bond, it is important also to have these so that you will be assured at any point during the construction period.
   c. Duration of Construction. This is for you to know how long they can finish your project. Also, this will help you manage your cash flow.
   d. Mode of Payment. The best mode of payment for contractors would be through Progress Billing with pro-rated down payment and retention.(We will discuss this further on my next articles)
   e. Excluded items. Although you are probably dealing with a General Contractor, there are still items that you will prefer to be excluded in the contract. This is because these items are owner-preference dependent. And/or for you to save on overhead charges if included in the contract.

4. Before you meet with them, prepare a set of blueprints and a copy of the Material Specifications prepared by your architect/designer. You will be giving each contractor a copy of these to be their basis of the estimates/quotation you will be asking them. If possible, give them also a standard bid form. You can ask your architect/designer or CM to make this. This is for apple to apple comparison of bids.

Expect that they will be asking further question upon reviewing the plans. If you can not answer their questions, or the questions are too technical for you, you will have to forward these to your architect/designer. Even if  only one contractor asked a question give your answers also to the other contractors. This is to keep them aligned and maintain a good cost comparison. In the architect's office, these are called bid bulletins.

Estimates usually takes a week or two to finish. If you are not in a rush, you can set the deadline of submission of bids 2 weeks after transmitting the bid documents to them.

For these types of project, a Closed Bid is usually the way to go. This means that they will be submitting their bids with their best price in an enclosed envelope and it is up to the client to decide on whom the project will be awarded.