Our customers time and time again placed this on their list. So let’s talk about “Price” and how different companies work. The home renovation industry is structured in two ways - either “fixed cost” or “contractor cost plus”.

Fixed cost.

Fixed cost puts 100% of the responsibility on the contractor. This model was built around the accountability and expertise of the contractor. The price they quote before the work starts is the price you pay. Fixed cost ensures that the contractor has 100% completed drawings, material selections, permits, and the remaining 400+ lines on their spreadsheet completely figured out before construction begins. A lot of time will go into this beginning stage before any actual construction work will begin on the project. The contractor must “stick” with their price on a fixed model which puts pressure on the contractor to get everything lined up ahead of time or they start losing money. Ensure that you choose an experienced contractor, so you can avoid having an unfinished project. A professional will finish on budget and is (by necessity) very efficient with their time.

Cost Plus.

Cost plus model is exactly how it sounds - price is based on the cost of the renovation, plus a percentage for the contractor. Typically with this model, the contractor and client will talk more in general terms about what they want to get done, and the initial stage of the project moves quickly, as there is no need for detailed decisions to be made before starting into construction. The cost for the project is in a constant state of flux and will vary from day to day, based on the ongoing decisions made about the project. The more you spend, the more money the contractor makes. The less efficient your contractor, again the more it costs you. Lets look at flooring supply and installation as an example. You can install a $10 per sq.ft carpet or $40 per sq.ft carpet. The same time and labour and steps are required, but the contractor will make 4 times more if you chose to go with the $40 per sq.ft carpet. If the contractor decides to make an extra two trips to the flooring supplier due to inefficiencies the more that contractor earns for his time.

Cost plus sounds appealing as it’s “transparent.” All costs are provided and marked up, for easy decision making. However, you as the customer are ultimately responsible if there are contractor inefficiencies or errors due to poor planning. Lower risk is placed on the contractor. There is not the same need to establish cost certainty before construction starts. The contractor can base costs on estimates and not hard quotes.

Some would argue that a fixed price limits changes, creativity and quality. However, this is not the case, as there will be many options offered to the customer during the design phase. And once construction begins, “change orders”, or adjustments, can come in when required, and a fixed quote will be provided for these.

Staying on budget is closely related to the above. A renovation does not begin at the demolition phase like so many of us think, but rather at the design and planning stage, where realistic budget requirements will be set. So often a renovation will start on an unrealistic budget vs. scope; and the customer finds their budget increasing 2 or 3 times more than agreed on going in, as the scope of work starts to increase due to poor upfront planning. For a renovation company to remain on budget, all parties must first understand budget and scope requirements. You require a skilled estimator to evaluate the scope, based on hundreds of past projects, to ensure budget and scope match. Then the designer must work with the estimator to ensure the design layout and materials selected fit the original scope and budget. Next, the contractor’s trades and sub-trades submit hard quotes to the contractor and adjustments are made where necessary. This all happens before construction starts and requires a lot of time and due diligence, but it’s the only failsafe way of ensuring budget.

So how do you know if a contractor has a good reputation and stellar workmanship? Reputation is based on past projects and general feelings left behind. Workmanship is directly tied to reputation. If the work completed is poor the reputation drops. The best way to learn a company is to start with their staff, site supervisors and trades group. Satisfied staff typically means clients will follow suit. A lot can be learned by checking real life projects in different stages. It’s also recommended to see a list of their preferred suppliers and/or sub-trades and start doing your homework. You’ll quickly realize the caliber of contractor you are dealing with by those who surround the company. Speaking with past clients and visiting completed projects can also be helpful.

Staying on schedule is one of the most difficult tasks for any renovation company. Why?

For starters the most obvious question is: have you discussed and committed to a completion date in writing? It sounds simple, but is often never done.

Another common reason is that contractors are typically dealing with more than one project at a time, and they are relying on others to keep on schedule. Trades or sub-trades will also be juggling their job schedules and demands. How can you make sure that your project remains a priority? To start with, stay away from the cheapest renovator. You’ll get what you pay for in the way of quality and choosing the cheapest option puts you at the back of the line. All skilled trades people will stack the higherpaying jobs upfront and fit in the lower-paying jobs where it’s convenient.

Another reason for not staying on schedule is largely due to poor design, material selection and procurement. Poor design can cause redesign and/or rebuilding along the way in construction. Poor material selection may fail to meet the client’s expectations or the integrity of the renovation, leading to work needing to be re-done. Many clients end up re-choosing materials, which stalls the entire project because their initial selection isn’t in stock.

Change orders can also cause issues with slowdowns, hence the importance for thorough design. Ideally, your contractor should have central communication hub that allows all parties including yourself to know where the project is at. This includes change orders, progress & delay updates, and more, for full transparency and accountability. Change orders should also be easily calculated so the customer knows the exact cost and also impact on the overall schedule before proceeding.

Usually higher-volume contractors have a very loyal subtrade base who prioritize their project based on volume of past business and ongoing future business. The exact opposite happens when the consumer decides on going with a smaller scale (one man) renovator or decides to contract the project alone.

This seems hard to believe, but it was one of the most common concerns that our survey uncovered. Why are so many renovations left unfinished?

1. Scope wasn’t clear from the start; so a clear start and finish was never determined.
2. The trades and or contractor obviously had other more profitable jobs to start or work on.
3. The trades or contractor was already paid in full and had no financial incentive to complete.
4. The completion or finishing list continually grew, and the contractor ran out of time and had to focus on his other projects.
5. Perhaps the most common issue is; “The trade or contractor determined the job was done, I disagree as it wasn’t done to my standard”.

How can these problems be avoided?

1. Scope must be clearly stated in the construction contract. It’s always a good idea to put a completion target date as well. This keeps all parties accountable in moving through a renovation with a common goal.
2. This is something based more on company principle. Contractors with integrity should never leave a project unfinished because of other demand. The best way to avoid this is by sitting down and drawing up a completion plan with your contractor.
3. When a project is paid, the contractor often moves onto the next, as there’s nothing in it to keep them coming back. Emails, phone calls and texts are ignored or evaded. So how do you deal with this? The best advice is to first include in your contract a holdback of 10% until the project is complete. Renovators won’t like this, but it’s the only fair way to ensure your interests are protected.
4. This is a common issue that all contractors deal with. The contractor can feel as though a customer is taking advantage asking for extras or for a level of finish that’s isn’t possible or wasn’t agreed on in writing from the start. Both parties have a responsibility. The renovator needs to clearly communicate upfront their expectations on what does and doesn’t belong on the list. The customer's responsibility is to be onboard before proceeding with expectations, and then stay the course.
5. We all have different standards and levels of expectations. Aligning expectations is ideal, but can be very challenging. The best solution regardless of your contractor is to agree upfront that a 3rd party will be brought in for inspection. This 3rd party must understand your provincial building codes, limitations and standards. They will typically use the same standards as home builders that is supported by the provincial home warranty legislation. This is key, as you now have a person at arms length inspecting based on provincial standards. They will note any deficiencies based on Alberta New Home Warranty standards. This mediator removes subjective opinions to help settle issues quickly and determines what does or doesn’t belong on a finishing list, so you and your contractor can complete the project on a successful note.