New Construction and Remodeling:

All successful projects begin with a well-designed plan. The same disciplines apply to new construction or remodeling of commercial or residential buildings. At the very minimum, the following steps should be considered before committing to any project.

Step 1: Plan your budget:

Determine what financial resources are available for the project. How much money are you comfortable with spending or borrowing on your construction project? If financing is required, find a local lender that has experience in construction lending. A lender who has experience in construction lending will help you in every step of the lending process and can save you time and money!

Step 2: Select a building plan

Many projects are built using stock plans from catalogs or online websites. A custom designed home or office building, on the other hand, is created specifically for the family or business use. In most cases, custom designed buildings require the services of local designers and/or licensed architects. A designer or architect will have the field knowledge to design around your personal requirements and help you design a home or building that meets your budget.

What is the difference between a building designer and an architect? In many cases, building designers offer a similar range of services to architects. Architects are licensed or registered with state based authorities (in Maine, the Department of Professional and Financial Regulation) and designers are not. The designer will usually require a waiver of liability and an architect should absorb liability in the event of a design flaw or structural defect. Last but not least, a good set of building plans by a designer will usually run approximately $1,500 to $2,500 with costs increasing with complexity of the project. Plans from a licensed architect may start around $10,000 and go up also depending on the complexity of the project.

Step 3: Select a builder

Take your time with this step!

Your builder can single handedly make or break you! Your designer or architect will make recommendations on a builder that fits the complexity of the project. Local building supply companies will also be able to provide names to add to your interview list. Friends or neighbors may also be open to providing names of contractors who they have worked with. Remember, no matter where you get the name of a contractor, the person that referred them is BIASED!!! Do your research and ask lots of questions!

→  How long has the contractor been in business?
→   What licenses, if any, does the contractor hold?
→   What is the contractor’s specialty?
→   Has the contractor done a project similar to yours? Where? Get the names of customers and call them! Don’t take the references as face value!
→   How and when does the contractor clean the building site? In particular, how is fine dust handled?
→   What work schedule will be followed?
→   Does the contractor carry workers’ compensation and general liability insurance? Ask for the certificates!
→   Does the contractor enter into written contracts with all subcontractors? Will you have access to the subcontractors if they are hired for the job?
→   Run a credit check on the contractor! If the contractor is unable to manage its own money, what makes you think it can manage yours?
→   Check with the Better Business Bureau and the Attorney Generals’ Consumer Protection Division to see if the contractor is listed in any
complaints.
→   You will not offend reputable contractors with these questions. If a contractor doesn’t seem to know much about the technical details of the job or         does not want to talk about them, you may have the wrong contractor.

Step 4: The Contractor and Owner Relationship

For a large project, it will take two to three weeks for a contractor to prepare an estimate. The estimate should include everything that the contractor will have to do to complete the job. Specific information with types of materials to be used throughout the project will be clearly outlined. Example: make and model of heating system, windows, roofing, insulation and trim packages, just to name a few.

A detailed written contract between you and your contractor is essential to any construction project, no matter its size. Even the smallest job should be put in writing. Have your own legal counsel review the contract before you sign it. The $100 you spend now with your attorney will save you thousands later. A few essentials to a contract between you and your builder are:

1. Detailed description of the scope of work, plans and a detailed specification of all the materials (type, quality, model) to be used.
2. The right to retain a lien holdback as specified in your State Mandates.
3. A clause stating that work will conform to the requirements of all applicable codes, such as building, safety and fire codes.
4. Start and completion dates with described penalties for not completing on time. Weather and worker strikes should not affect your project!
5. Price and payment schedule. This should include a cost breakdown of the entire project. Payments should depend on progress of the project and be reviewed by an unbiased third party. A lending institution that specializes in construction lending will require regular site reviews for the purposes of payment of each invoice. Keep in mind the lien and seasonal holdbacks!
6. A list of all subcontractors along with their addresses and telephone numbers that will be used on the job and the scope of work they will be completing. This will be helpful once you have moved in and need follow up work completed.
7. A description of the warranty that comes with your new home.
8. An agreement of methods for resolving conflicts and disputes.
9. A change order statement: Any alteration of deviation from the contractual specifications that results in a revision of the contract price will be executed only upon the parties entering into a written change order.
10. Statement of energy standards. A statement by the contractor establishing minimum energy efficient building standards for new construction, and whether the new building or addition to an existing building will meet or exceed those standards.

Step 5: Inspect what you expect!

Throughout the course of construction the project owner should regularly visit the construction site and review the work to ensure that it is being completed to ensure it is what was contracted. If there are questions or concerns, they should be discussed in a private area and not in the middle of the construction site. Progress and scheduling concerns should always be addressed at the time of progress payment and recorded in writing.