QUOTE(HotGimmick @ Feb 17 2011, 07:55 PM)
Hi jojozep, how was your negotiation with your contractors? Did you have an itemised bill of quantities (bq) listing all the quantities and the rates or did you just agree on what you wanted your house to be like with just a lump quotation? Any formal contract need to be signed?
I'm new to this. Would appreciate if you can share with me how is the negotiation procedure before reaching an agreement and the contractor starts work. Thank you

It is interesting -what you asked. I noticed that most contractors are very casual,that is they come in with slippers and walk around, pretending to be interested while checking you out. Most of them wear/dress poorly and have disgusting attitudes.Some of them really pisses me off. You begin to wonder how this industry works.
2 things to remember about the approach before we start - first you are the boss, second - you are the boss.
Never let them sense any fear, they are like hyenas, they will take advantage of that fear.
Firstly, capture and communicate the requirements.
ok, most of these guys I talked to, did not have a formal education..most of them learned the trade the street-way. there is almost no technique to gather your requirements. First you will show him the site and go blah-blah-blah..I want this wall knock and extend this wall to there...and he will follow you like a puppy and nod his head.
After 40 minutes, he would have understood 5% of what you said. Tomorrow, he will remember 1% of what you said.
So I think I talked to about 8-10 companies, some cannot tie their own shoe laces, some behave like you are the one begging them,some are only interested in big margin projects. It is OK because the more you talk to them, the more you learn, be a good listener. Write notes if possible..ask questions since they are the experts,be a pig not the tiger.
Ok, before you call them in for an appointment, prepare this things:
1)simple A4 plan- color the extensions red, the new windows,new doors. SCOPE the new extensions in RED so that it is very clear to these contractors, give them a copy of it to take away. If possible, you can draw in the furniture in orange color.
2) Have a high level scope of work - like build new maid room, build new guest room, extend dining room...change all living room floor to tiles. Then ask them to give you a good quote within a few days. Let say 4-5 days..
If they miss this date - you should know his work attitude towards you.
After they have given you a quote, some will give you more details, some will give you less details. You already can see their approach and know the size of their companies. Some will not bother to even submit.
Short list to about 4-5,as you now want to go into the details:
Using the high level scope, break them into details. For example, build a new guest room involves breaking the window and the wall to ceiling height and extend the room to the garden as detailed in the architect plan. Rip the carpet out and prepare the new floor for 2x2 feet tiling. Build the new sliding door frame for a 2 frame aluminum powder coated door leading to the garden. New coat of paint,with primer....etc..
(If you miss anything, be prepared to pay...so this must be stated clearly here,otherwise, don't expect it to be free).
Ok, those you have short-listed, make appointments with them and tell them that they have been shortlisted,go thru these detailed requirements and ask them to confirm that they understood these requirements. If possible, get them to put their initials. Ask them to resubmit their quotations if they have missed anything. Also ask them to submit with as much details as possible, including grade of cement, and as much details as possible. Tell them they will be responsible for what is submitted and can be used legally.
After the second submission of detailed quotations, is the negotiations. You probably will have disqualified further due to the price. During this time, you need to be talking to only about 2-3 contractors as it is about price. The grade, scope, materials should be similiar and they have convinced you that they are capable of delivering the work. Ask to visit their previous work...any references..
Ok, I need to highlight that if you use a contract, there will be clauses that the contractor will not agree, or if he agree, he will charge extra 20% for it. For example, all workers must be insured, he will only pass the cost to you.
Yes, as much detailed quotation as possible. You can also tell from this exercise how well the contractor can work with you. fyi, I ended up
1)not using the contract - as this would have increased the price another 20%
2)went for lump sum by phases - with reference to the detailed scope of work so that contractors is responsible for site and people and security
3)only agreed the wetworks to the contractor, they are required to quote competively for tiling, plaster ceiling,kitchen cabinets in phases...so we know the price is good price...the quality is monitored using progress payment.
In the end, a few things of great importance to a good delivery and a happy relationship.
1)Cash flow...I always pay on time but I will make a site visit to count the materials...and the people onsite..checking on the progress almost everyday.
2)Both owner and contractor must work closely. The owner must make decisions fast after a discussion with contractor.
3)At anytime, the progress payment must be enough for the contractor and the owner help their cashflow by not delaying unnecessary..or increase their risks of collecting money. The trust both ways is important.
A bill of quatities will be useful. A contract can add costs. End of the day, if you squeeze the contractor too hard, no one wins. 2 things I think is crucial to get it RIGHT.
1) The progress payment milestones - you get this right for yourself and the contractor, it will be win-win.
2) The chemistry and personal styles of the owner and contractor.
Remember, it is a piece of paper..and if it do end up in court, nobody wins. Sometimes, small things crops up and if there is a good relationship, the contractor do not mind doing it free of charge as part of the service factor. Similiarly, I will not hesitate to take the contractor out for a lunch or a cup of coffee during discussion.
But end of the day, remember it is your house and you are the boss of the renovation.
This post has been edited by jojozep: Feb 18 2011, 03:53 AM