The right contract

[StillHope]

I was reading Hoooligal's response on Kathy's thread about not knowing

much about contracts in Hawaii.

So,I am thinking,may be our experts will educate us?

(My ex used to tell me: "Stop thinking!",but I keep doing it...)

Seriously, let's say, you have a contract to build a house for $### /sq ft.

And let's assume,your project is simple,

just the basics.(No golden toilet seat).

What is included?

Anyway,I am asking our experts to share what they can.

That would be great!
Please!!

[Rob Tucker]

I am not fond of general contracts, don't like em.... they have a dozen advantages for the contractor and only one for the client.

I prefer hiring "Project Manager's" with a written agreement that provides 1) payment after stages of service are completed, 2) the ability to fire or dismiss at will, 3) arbitration in the event of a dispute.

Punaweb moderator

[StillHope]

Thank you,Rob!
I totally agree with you.But some people (especially with a construction loan) might have to work with the general contractor.
I don't have to worry about mine and very grateful for it.But it is always good to have some education on the subject.

[DanielP]

I suppose that it depends on how the contract is written. Boilerplate contracts can make your eyes glaze over faster than a cloud of VOG at the rim of Pu'u Oo'o.

A contract should be a communication tool that the owner and the Contractor use as a point of reference.

First off, a contract needs to be accompanied by an accurate set of plans and specifications; EVERY change and detail complete. No verbal alterations from the plans and specs. This is a huge pitfall and very common.

Specifications are eveything from the type and manufacturer of the siding to the paint to the tile installation method.

I have always hand typed out my contracts. Everything is spelled out in everyday language.

The overall price for the completed project including labor and materials in accordance with the plans and specifications.

The draw schedule (payments due at certain stages of completion) usually 6or7 for a new home.

Time frame. When the construction will begin and an anticipated completion date.

How change orders will be handled.

Disclosures and insurance issues; how disputes will be handled.

Allowances (included in the price)for items which the owner will choose. example: Finish flooring..... $ 2800. If you spend less then you get a credit, If you spend more, you pay the overage.

Items Not included. very important.

The time spent on careful preperation of plans, specifications and a carefully written contract will save tons of time and aggravation and lawsuits down the road.

By the way, It is the owners responsibility to provide the contractor with the plans and specifications, or pay the contractor to develop them.

Good luck, Dan

[StillHope]

Dan,it's so generous of you to give all those details.Thank you very much.
I just need clarification on "How the change of orders will be handled".I might have some idea,but not sure...

[DanielP]

Hope,

I have always tried to discourage change orders; it disrupts the flow and can hammer efficiency and scheduling. That is why I am so insistent on accurate plans and specs.

Example:
Any requested change to the original plans or specifications shall be submitted in writing by the owner to the contractor. There will be a $100 fee for any change request. Upon receipt of a change request and fee, the contractor may provide a cost for the change and if agreed to by the owner, shall be payable at that time. Contractor is not obligated to agree to perform changes.

I usually figure a free change or two for my clients, but this clause tends to get them to pay more attention to the planning proceess and keeps them from feeling like they have a construction servant at their beck and call.

The allowance clauses in a contract can give alot of freedom of choice for a client, but I don't like moving bathrooms when I am getting ready for drywall!

Dan

[Rob Tucker]

I ended up running my contracts with a $50 minimum estimating charge for changes and a $100 handling charge for changes.

Prior to that I had clients who would negotiate extremely tight budgets and immediately after signing want to start upgrading everything.
Some jobs had over 80 change orders. Drove me nuts. Dealing with change order in the field is a bit like riding at full gallop while shooting at bandits over your shoulder. How can you estimate effectively in the field with a tool belt on?

Punaweb moderator

[DanielP]

Rob,

"the ability to fire or dismiss at will" can rub badly in reverse if your contractor up and walks out on you!

I have most always done "design/build" contracting: Client contacts me. I insist that they call my references. They give me a budget and a concept. If I think that it is doable they can pay me to design to fit their needs and provide pricing. Then they can take my bid or take their plans to anyone they wish. Has worked well for years. 100% Satisfied customers and friends!

Dan

[Rob Tucker]

The contractor would have the same right to terminate as the client in a P.M. agreement.

If the client is a nightmare, or the contractor is a nightmare it is better to end it rapidly.

So there is incentive to treat each other a little better in a P.M. agreement.

Sometimes two otherwise reasonable people work together like fire and water. Combine each of them
with someone else and everything changes. If they are contractually bound to each other in a fire
and water situation then misery ensues.

Punaweb moderator

[Kapohocat]

Well said Rob.

I might also remind some of you that this is a small community. Builders talk about all of you to when they are at their own Puna cococnut wireless web aka lumber yard, or CSi or Home depot or any of the places they go to in a day. So while y'all sit in your ivory towers - remember if you dont get a call back from someone in the industry, maybe you are a thread in their world.

I know one person in upper HPP who no licensed contractor will work for.