13 Things to Consider When Choosing the Right Construction Company in 2023

Do you plan to build a custom home, commercial property, or townhouse in 2023? Choosing the right construction company makes the huge difference between a successful project and a total waste of resources (money & time). We have created this guide to assist you in making the right decision. Also, if you read till the end, you’ll find a rewarding bonus! You don’t want to miss it.

Research

When looking for a product or service, the first thing you want to do is pick up your smartphone or turn on your computer and surf the internet for information about that product or service. So, when looking for a construction company, you can start by checking the internet for things like “best construction firms in Australia” or “reliable construction companies near me”. 

A lot of information will come up but you must read through the search results carefully. This will give you a hint of which company is worth checking out. Furthermore, you can request recommendations from your friends, family members, neighbors, or real estate agents. Ensure you get different opinions so you can have various information at your disposal.

Check Different Companies

From your research, you will create a list of companies to check out. It is important to discuss with different contractors instead of just picking one on the spot. This will help you see how contractors talk about business and interact with their clients. 

You do not want to hire someone who you are not comfortable with or whose presence intimidates you. Hence, the contractor should be friendly but professional.

Find Out Their Previous Experience

One way to evaluate the future success of a contractor is to check their past successes. If the contractor has successfully completed projects that are similar to yours, there is every possibility that they will do yours even better. Because they have done similar projects in the past, they have learned what methods will help them save cost. They also know the type of problems that may arise in the process as well as how to tackle them. Some big companies have display homes where you can see the quality of their service and check inclusions that they normally have in a building contract

To know the right company for your construction project, you first need to write down the specific elements of your project.  For instance, if it is a building project, you should know the type of building and the type of rooms you want. After that, ask the contractors you are considering to present samples of previous projects that fit what you want.

Consider the fact that the experiences of the construction company may not be exactly the same as the elements you listed. However, they should have incorporated similar things in their past projects or they might have display homes where you see some of them.

Request References

Requesting references is a critical aspect of hiring a construction company. You can email or call a few of their past clients to know what they have to say about their services. This is among the top ways to know whether the contractor will offer cutting-edge services. The information provided will help you evaluate the quality of work to expect and whether the contractor is willing to handle issues that may arise later.

If a contractor is unwilling to provide references, they may be hiding something. Also, if you are unsatisfied with the testimonials, it implies that they had unsettled issues with their clients. If you encounter such situations, do not feel like you are stuck; there are many other companies you can choose from. Although seeking testimonials and references may take time, it gives you a vivid picture of what working with the company would look like.

You can order a free property report on our website and get a better understanding of the most recent sales in that area.

Terms and Conditions

Majority of builders have very strict policy around contract and plan changes. For example, after signing a contract, you might decide to move an internal wall slightly or add extra features. It might be very costly to include any minor changes and takes lots of time to implement them as some big builders have complicated processes. Ensure you discuss all fees, terms and conditions prior making your final decision.

Availability of Subcontractors and Materials

The biggest problem in 2022 will be the scarcity of resources (labor and materials). Make sure that the company you want to deal with has enough resources to complete the construction. Some builders expect huge delays and postpone all new projects for 6-12 months.

You can check with building companies if they are ready to hire some of your own subcontractors and let you supply some types of materials and equipment (such as tiles and kitchen appliances). Small companies are normally more flexible.

Another essential aspect of workforces is the quality of subcontractors. You want a company that can pull the best workforce together to get the job done. To achieve this, the company should have experience working with subcontractors within the locality of the project.

Customer Service

Communication is key in ensuring you achieve the type of results you desire. We, therefore, recommend choosing a company that has professional customer service. All you need to do is call them. If the customer service rep offers detailed responses to your questions and open communication, you may consider hiring their services.

Insurance, License, and Bond

Never make the mistake of hiring a contractor without requesting their license. The license shows that they have the relevant skills, training, experience, and permission to do the job. It also implies that you can report them to a government agency if they fail to deliver as expected.

Furthermore, the company should be bonded. This will protect you if they do a poor job or fail to complete the work. They should also have the right insurance to cover property damage and worker’s compensation. Ensure you request the insurance certificate when requesting their qualifications.

Commitment to Understanding Your Vision

The construction company you choose should be willing to understand as well as carry out your vision for the project. Whether you are renovating or creating a custom home, the contractor should see beyond the floor plan. 

Each decision you make influences the nature of the project as well as its outcome. As a result, you need a company that understands what you want to achieve and directs you on the right path. This will ensure the completed project fulfills your needs.

Commitment to Staying Within Your Budget

A professional construction company should be able to deliver top-notch projects cost-effectively. However, it is risky to prioritize cost over everything. What you need is a team that can work with your budget while considering the overall value.

With that being said, when evaluating quotes, ensure you check out each item holistically, not just the last figures. If you discover that one of the quotes is far lower than the others, you should look at it critically. Try to know whether the contractor missed some items or is cutting corners. 

Choosing the company with the least quote may be tempting but it may cause you major problems down the line. It is best to weigh the costs alongside the items on the quotation.

Another thing to consider is the willingness and ability of the company to do value engineering. This aims at increasing your project’s value by replacing or removing things that are not essential to your project goal.

Furthermore, if you plan to take a loan to fund your project, you should find out your options in advance. You also do not want to acquire more debt than you can manage. So, we recommend checking your future monthly repayments using our online repayment calculator placed on NG Loans website or book a free consultation to get pre-approval done. You can also assess monthly repayments based on different interest rates and term of the loan using this tool.

Preliminary Plan and Initial Fees

Your preconstruction plan must include soil testing. This is important because it helps you to know the soil composition and whether it can support a foundation properly. Soil engineers are responsible for soil testing and you can either hire them privately or through the construction company.

Most construction companies ask to pay an initial deposit of $2,000 – $5,000 to complete the soil tests and prepare the preliminary plan of your future house. These fees are non-refundable. So, you need to be sure that you won’t change your mind about using the company after paying the fees.

Fixed Price Contract

A fixed price contract entails establishing a specific price for a project irrespective of the materials to be used and the duration of the project. As a result, many contractors give themselves leeway for unplanned costs that may occur within the lifetime of the project. This means that you may pay slightly above the market price to cover the contractor’s risk in case the prices of certain items increase while the project is ongoing.

To reduce this risk, some contractors prefer to quote a range instead of giving a particular price. However, the fixed price contract is quite favorable because it does not require much paperwork. Also, some owners willingly pay the high price tag upfront so they won’t have to deal with daily or hourly billing contracts and the fluctuating costs of construction materials.

Before you sign any contract, ensure you pass it through an attorney or any other specialist who has vast knowledge and experience in handling construction contracts. They will ensure that the document does not contain any clause that will haunt you later. You do not want to skip this process because you are investing a huge amount of money in your construction project. The last thing you want is complications.

Go with Your Gut

Our last tip for choosing the right construction company is to trust your gut. Most times, your gut is right. If you do not feel great about them or feel that something is off about the company, simply walk away instead of going ahead to sign a contract with them. It is easier to call things off when you have not invested any money than when the project has already commenced.

You are supposed to be happy and optimistic when hiring a contractor. So, if you feel any different, your gut may be sending you a signal. Move on with your search and you will certainly find other companies that you can trust.

Bonus: Tips for Requesting Quotations from Contractors

If you have decided to move ahead with your construction project, you should be ready to accept quotations from contractors. This may seem simple but the process of gathering and analyzing quotes is quite challenging. So, how can you select the right firm through their quotes? What factors distinguish each contractor? The tips below will guide you when going requesting quotations from contractors. 

Be Specific

One of the major things that determine whether you are getting accurate quotations is to give the contractor specific information about the project. The construction team should meet with you to discuss the details of the project, including the specific materials and techniques suitable for the job.

If you are not detailed enough, the team may be left with no other option than to interpret the information to the best of their knowledge. As such, the final quotes you will receive will reflect different figures. This will not only make evaluating quotes difficult but also getting the best prices.

Also, instead of selecting a construction company based on experience and best price, you will have to consider the company that best interpreted the information you gave. Without being specific about what you want, you and the construction team cannot be on the same page.

If the team you chose did not interpret your limited information properly, they will have to make changes to the project or the outcome will not be what you desired. This implies that you will either accept expensive change orders or stay with a structure that feels and looks different from the original plan. In the end, you will be unhappy and frustrated about the project.

Take time to go through documents and give out specific information before issuing them for quotes. This will assist you in getting prices that you can easily compare. Also, your money, time, and efforts will match the endpoint.

If the Bidder Isn’t Asking Questions, Tread with Caution

When contractors bid for your project, if they do not request more information or clarification, they are probably not reading your documents thoroughly. There are 2 categories of contractors that you should take note of when accepting quotes. 

The first category reads your project description actively so they can come up with a reliable and comprehensive proposal that contains your foreseeable needs. This shows that they are going the extra mile to gain clarity where necessary as well as avoiding the use of presumptions to work out their estimates. Although this method is inclusive and reliable, it may seem more expensive at a glance.

The second category simply puts numbers together based on what they find in your project description, nothing more. In situations when the project description is not clear enough, the contractor speculates and adds the barest minimum to the quotation in order to keep the figures as low as possible.

You may be tempted to choose the quotes with low figures, but you will later realize that the contractor was not thorough in their approach. And if you want them to upgrade the methods or materials to your desired quality, you should expect additional fees. Therefore, it is important to choose contractors that ask questions and review your documents thoroughly before coming up with estimates.

Compare Quotes Intentionally

Irrespective of how clear you were when describing your project, some construction companies won’t interpret the quotes correctly. For instance, a contractor may include a good quality roofing material that will serve you for several years. On the other hand, another contractor may go with an inferior quality that may end up as a disaster after a few days of rainfall. 

The latter contractor will present low figures that will eventually skyrocket when the project commences. This is because you will discover the quality of roofing materials and request a change. However, small changes here and there add up quickly; soon, the least bid ends up being the most expensive one.

So, how can you avoid such occurrences? You should intentionally compare quotes to ensure they match the outcome you want. Bear in mind that thorough bids may not be cheap but they accurately depict the cost of the entire project. They will save you headaches and more expenses.

A Hard Bid Isn’t Always Worth the Stress

A hard bid involves hiring a team to design a bid document, then requesting pricing from various construction companies based on that document. Typically, the contractors must present their bids within a stipulated time frame, and the lowest bidder wins the contract. In this method, contractors compete for jobs by submitting the least possible price.

It is a convenient procurement method as it allows owners to compare estimates quickly and get the best price for the job. However, it is not without challenges. The challenges include the following:

First, the contractors must give estimates for only what is clearly stated on the bid document. This makes the process quite fair among different construction companies as they all have the same standard from which they will create bids. But the design may not account for the unseen conditions. It may also not include enough details for the complete construction. As a result, the estimates submitted won’t include contingency funds in case the contractor encounters risk on the job. 

Second, hard bids may result in conflict between the contractor and the team that designed the bid document. There may be some gray sections that the designer assumes the contractor should know and include in the pricing. The owner ends up having to figure out who was wrong or right.

Third, hard bid influences some contractors to cut corners when choosing materials or doing their work to reduce costs and increase profits. They simply try to fulfill their own part of the contract, but you must know that there is more to the lowest pricing. You have to sacrifice quality or time.

A hard bid may be effective for getting equal bids from contractors, it can stir up a contentious business relationship between you, the architect or designer, the contractor, and subcontractors. Any slight change whether inspired by you, the owner or the contractor will lead to changes in the original cost of the entire project.

Conclusion

When you want to hire a construction company, you have to choose one with the right skill set, experiences, and resources to complete the project within your budget and on time. There are several construction companies to choose from, and finding the right one may overwhelm you. The process of vetting construction companies consumes a lot of time, but it could save you potential delays and headaches.

Lastly, if you are considering applying for a loan to fund your construction project, a mortgage broker can help you find the best rates and pricing. Brokers can save you from making terrible mistakes because they are familiar with the tricky mortgage process. 

Book a free consultation today and our mortgage brokers will be happy to navigate you in the right direction.