Hiring a General Contractor for a construction project can be a daunting task. There are many options, but not all of them will be right for your job. If you have never gone through the construction process before, you may be asking “where do I even start” or “how do I make the right decision?”

Whether you are a seasoned pro with your rolodex of General Contractors ready or embarking on a construction journey for the first time, we have put together a checklist of what to look for, questions to ask, and red flags to watch out for so you can feel confident that you are making the best decision.

1.      Evaluate Their Portfolio and Review Testimonials from Previous Clients and Subcontractors

What is the first thing you would look at when interviewing someone for a job at your company? Their resume. Hiring a General Contractor is no different. Have they completed projects like yours in the past? Do you like their style of work? How long have they been in business? Those are all important questions to consider before you move forward in discussions.

Another good way to evaluate the General Contractor is to contact previous clients. A company with a good reputation and strong relationships will not shy away from handing over a list of references.

2.      Evaluate Their Safety Standards and Procedures

A good way to evaluate a firm’s commitment to safety is to obtain their Experience Modification Rate (EMR). The EMR is a number used by insurance carriers to determine how risky a firm is. The calculation is made up of many data points from claim history, job classification rate, and payroll. An EMR of 1.0 is average, meaning the contractor is found to be no more or less risky than all other Contractors in the state. A rating of 1 or below is an indicator that the contractor is considered safe, and an EMR above 1.0 indicates the Contractor is riskier. The number of incidents, the type of incident, and the amount paid out for each loss are all considered when calculating an EMR.

We believe that all people – our employees, our subcontractors, and everyone that comes in contact with our work deserves to work in a safe place and go home to their families at the end of every day. At Merit, we know this requires each person, from the newest crew member to the firm’s Principal, to be equally accountable for creating a safe workplace. We are proud to have an EMR of .6100 in 2023!

3.      Insurance Coverage

All General Contractor’s should have general liability insurance and workers compensation insurance. You should ask for proof of insurance and coverage details. Depending on the size of the project, more coverage may be needed than the state minimum. Hiring a General Contractor without proper insurance adds a dangerous level of risk for your project and for you. The General Contractor should also ensure that every subcontractor they bring to your project is also properly insured.

4.      Obtain Detailed Proposals

Unless you have a General Contractor in mind already, chances are you will put out a Request for Proposal or Qualification to firms in the area. These are detailed proposals that may include the firms’ experience and qualifications, key project staff, project approach, safety commitments, project and fee schedule, current and projected workload, and references from past projects.

5.      Have In-Depth Conversations

A reputable General Contractor should provide a proposal that gives you a clear understanding of the company and is upfront about scope of work and payment terms, but that is not where the conversation should start or end. How the General Contractor communicates during the pre-construction phase is a good indicator of how they will communicate during the project.

6.      Presents a Clear Contract

The contract includes a narrative which clearly defines the scope of work and breaks it out into the 16 construction divisions. It includes the value of the work (cost) and what fee percentage will be charged for any changes to the scope of the work, how long the work will take and a schedule of what can be expected to happen. Finally, it clearly defines what is needed for work to begin such as a written order to proceed, all permits issued, and a fully executed contract.

It should also provide payment terms and the general conditions of the agreement between the parties and how any disagreements will be handled if necessary.

7.      Lien Releases

A lien is a security interest in a property granted to someone other than the property’s owner; in the case of a construction project, the Contractor, Subcontractors, and/or Suppliers. A Construction lien provides the lienholder with an interest in that property that can be enforced against the property if a specific debt is not paid. A General Contractor ensures that the Project Owner is protected from liens on their property by securing lien releases as they pay their subcontractors.

Red Flags to Watch Out For:

• Extremely Low Bid

An extremely low bid could indicate that the firm does not have the experience to know what your project will entail, may be using inferior products and materials, or will introduce new costs during the construction process.

• Want to do the project without permits

The correct permits are just as important as the correct insurance, and any company trying to do your project without permits should be cause for concern. Most projects, even small ones, require permits and inspections that an unlicensed contractor might ignore or may be unfamiliar with. If your project isn’t permitted or doesn’t comply with the building code, you may have to remove or repair the work at your own expense and be subject to fines.