6 Critical Steps For Vetting A Contractor

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QUESTION From: Steve in CA

“How do you vet a contractor?”


Before answering this question, I have to first mention that bringing a contractor into a physical space more than once prior to having a negotiated Lease in hand, puts you at as much of a disadvantage as not negotiating sufficient time for your build-out.

The last thing you want to do is show the Landlord that you are so in love with the place, that you’re investing time and money into it before it’s even yours…or that you’re willing to pay rent before you’re generating revenue.

Now that I’ve gotten that off my chest…here are what I consider to be the 6 most critical steps for vetting a contractor:

1. Make sure they’ve done a project almost exactly like yours before (i.e., same use, same equipment line, same features, same city and in the same (or similar with the same zoning restrictions) district/township or neighborhood.

2. If you are Leasing a space, make sure the Landlord will approve them and that the Landlord shares any and all rules, requirements, policies, procedures, restrictions and/or guidelines of any sort with you so that you can share them with the GC prior to them discussing any specific details of the job / bidding on the job.

3. Make sure they not only have a general liability insurance policy but also E&O policy (and make sure they’re willing to guarantee (in writing) having both policies in amounts that are, at least, the estimated cost of your job + 50%)…and don’t just ask. Get copies of the policies in-hand and verify their authenticity / coverage before anyone swings a hammer.

4. Look at their other projects and speak to former clients to discuss quality of workmanship, adherence to ADA timelines, longstanding use of dedicated sub-contractors, how well they work with other vendors/materialmen, how well they listen to and address concerns, how materials have held up with heavy use over time and how accurate their estimates were (i.e., how close to budget they came in - excluding scope creep of course).

5. Spend time interviewing them and getting to know whether or not it’s a personality fit. Although you’re the one paying them, it could be a long marriage and, in many ways, they’re the boss...and the one’s assuming the bulk of the liability.

In my experience, no build-out EVER goes perfectly (or exactly according to plan)... so the question I always ask myself is this: “When there IS a problem, am I going to have a knot in my stomach when I have to speak with them about it.”

6. Ask up-front, If they are A.) Supplying all of the subs, B.) OK with lien waiver checks, C.) willing to sit down once/month for a financial / budget review and D.) Willing to install equipment you source and let you source all or some of the FF&E without them (or their subs) demanding a % of your spend. (It’s not like you’re bringing in a steak to a restaurant and asking them to cook it for you - you (or your chef) is the equipment expert - and in a field where used equipment is often repurposed and owner/operator relationships often result in significant discounts for everything from HVAC equip to cooking equipment; you shouldn’t have to pay someone a cut if they’re not sourcing equipment for you IMHO).

Best of Luck Steve! Can’t wait to see the new place… and give me a call if you need a project manager to serve as a liaison between you and whichever contractor you choose - Would be happy to help.