How to choose a builder and when to pay him or her or them?

Hiring a builder to do some renovation work on your home?

Before starting any new fix or renovation, it is important to ask yourself some questions such as 'what do I want the outcome to be?' and 'what is needed to get to the desired outcome?'. While these questions are basic, many people begin upgrading and fixing before visualling laying out the steps in their own minds and on paper. Doing so forces you to think through all the tasks that may be involved before you get started so you don't end up with a half finished botch job or get stuck because you have the correct tools or end up waiting for a particular part for days if not weeks because you discover it needs to be replaced along with the rest of the items you are upgrading.

Begin by creating a list of the things you want to change and then do a little bit of research into what would be involved. For most people, it will be obvious that to change a door handle you will need to buy a door handle, and maybe a door latch, and that you ought to measure the different sizes in case you need to drill or cut out a different sized hole. Questions to ask: you may need a screw driver, Philips or straight? You may need a tape measure to check the depth of the current door latch. You will need to measure the diameter, width and height so if you buy a new one you will know that it will fit. If the new latch won't fit, then you will potentially need so cut a different sized hole. You may need paint for the part of the door that you are replacing.

As you can see, even the simplest upgrade or replacement needs half a dozen questions answered before you should begin. No one wants to start a job and then realise he or she doesn't have the tools or the replacement equipment to finish the job. The way to avoid the half-finished-job syndrome is to think through what you are going to do. Perhaps even Youtube it so that you can see how professionals change things.

Getting started

Now that you have planned out what needs to be done and asked yourself the correct questions, you will have a good idea of the hardware you need to get the job done, what you need to buy, and the complexity of the labour skills involved. If it helps, write down the a list of the different tasks and break them down to individual tasks and the person who will be doing the task. This is essentially what project managers do when planning projects and they usually do it in the form of a Gantt chart

Go through the entire project plan

Whether the project plan is written on a piece of A4 in your scribbled handwriting or neatly presented in a Gantt Chart that you've created in Excel, make sure you go through the entire plan with the builder. This is especially important as it will set the timelines and the expecations that you have for work completion. This is the point at which you will be able to iron out the details, find issues in the plan you've put together, re-arrange certain tasks and potentially have to make sure you have the equipment, hardware delivery and manpower on schedule.

"You must align the behavioural incentives for both you and the tradesperson."

Make sure you align incentives. What does this mean?

Aligning incentives means that if you hire a builder on an hourly wage, you must also set timelines on how long you expect tasks to take. The builder's incentive is to maximise his/her/their pay, and whilst every builder will say he/she/they will not do this, human nature means that it will happen either consciously or subsconsciously. Hence, if you agree what you believe is a fair wage per hour, then make sure you also have the builder(s) agree to the timeline.

The other side of the equation is that if a builder quotes you for an entire job and not the time involved, make sure that you spec every task out in the Gantt Chart of project plan that you have done. The incentive for the builder(s) is to complete the task as quickly as possible, and that means he/she/they will be tempted to cut corners or leave things incomplete because there is no upside for them. Typically, the person hiring the builder, e.g. you, will not be an expert in whatever work that the tradesperson is an expert at, which is why this is where the highest risk of losing out by hiring someone who is not meticulous and conscientious. The way to solve this is to make sure you have a project spec and you go through each task in detail before the execution is started.

Payment terms

Most of us are only paid once a month from our salaries, and yet tradespeople want to be paid as quick as possible. The fact is all employees want to be paid as soon as possible and if we could ask our employers to pay us daily, nearly all of us would. Tradespeople are no different, and unlike the standard practice in business where there are payment terms of 30 days, tradespeople often request to be paid instantly, upfront, midway on a job or daily. Be very careful to what you agree to, but make sure this topic is brought up at the time of quotation so that you and the builder have an understanding and expectations are set. If you do not do this, and you let the builder get started, you are potentially opening Pandora's box.

"Never let a job get started before the timeline, outputs and payment terms are set and agreed upon."

Set payment terms and make no payment without an invoice

Payment terms can be set on a milestone basis, task basis or a time basis. Make sure that you agree how the payment will be made, what the criteria for the payment will be, and that you will not make any payment unless an invoice is issued. This is a steadfast rule in business. If your tradesperson says that he can't make an invoice, then do not pay him/her/them. You may find that the person is incentivised very quickly to be able to send you an invoice.