How Bad Contractors Cut Costs and Increase Their Profits

Welcome back to our third part in an ongoing series: 19
Secrets to Smart Home Remodeling. In this issue, we look at some ways
unscrupulous contractors try to cut costs – often to the detriment of your home
project. Keep reading to learn the warning signs. 

In part one and part two of this series, we talked about
ways to spot home improvement scams. We also discussed some things to look for
when you first start working with a home contractor.

If you missed either of those articles, or simply want to
brush up on them, you can find them here: 19 Secrets to Smart Home Remodeling:
Part One | Part Two

How Contractors Cut
Costs and Increase Their Profits


Not Having Proper

Make sure your contractor carries general liability
insurance. This type of insurance protects your property in case of damage
caused by the contractor and/or his employees. The insurance company will pay
for the cost of replacing and/or repairing any damage that occurs. 

Anyone can say they are insured – make the contractor prove
it by having their insurance company fax or mail a certificate of insurance to
you, with your name as the certificate holder.

Make sure your contractor carries workers’ compensation
insurance. It protects you from liability if a worker is injured while on your
property. Be aware that if the contractor doesn’t carry workers’ compensation
coverage, you may be liable for any injuries suffered by the contractor or any
of his employees on your property. 

If the contractor is a one-man operation, he can be exempt
from having to carry workers’ compensation insurance. If he is doing so
legally, he can provide you with a copy of his Construction Industry
Certificate of Exemption from Worker’s Compensation
. This is very risky for you
though. If he shows up with a helper and the helper gets hurt, with no workers’
compensation, you may have to pay the medical bills. If the uninsured
contractor is sloppy about verifying his sub-contractor’s workers’ compensation
insurance and the sub-contractor gets hurt, again, you may have to pay the medical
bills. In short, it is much safer to deal with a fully insured contractor.

Sorry, Clean-up Isn’t

The number one complaint people have during the course of
their project is the mess. Construction is dusty and dirty! It gets everywhere,
especially during demolition and if any sanding is being done. Make sure the
contractor will make an honest effort to keep the dust contained, or notify you
when the heavy dust generating operations will take place so you can place
sheets over furniture or more sensitive belongings. Make sure the contractor
agrees to (at no additional cost) sweep up and place all construction debris in
a predetermined place or refuse container at the end of every day. Dust
protection and clean-up should be specified in the contract! Leaving this mess
to the homeowner is a standard way that many contractors cut corners.

Hiring Inexperienced

Experienced building tradesmen (carpenters, drywallers,
electricians, etc) are in high demand. They also command a fairly decent hourly
wage from their employer. A common way for contractors to cut costs is to use
inexperienced workers who are paid less with the hope that the homeowner won’t
notice that the workmanship is sub par. Many contractors will play the game of
saying that their workers average 10 years of experience. This may be a true
statement, except the reality is that they have one guy with 30 years and two
guys who are rookies. In the home improvement business, experience is worth
paying extra for. They’ll get the job done faster and with higher quality.
Don’t get caught in the trap of paying for a craftsman and getting a rookie

Make sure the contractor or his foreman is on the job
whenever work is being performed – especially if sub-contractors will be used.
The responsible party must be intimately familiar with every aspect of your
project. If you won’t be home during the construction and must leave the house
unlocked, or leave a key with the contractor, you must feel comfortable. You
can’t be worried about what is going on when you are not there. 

Using Cheap Materials

Lot’s of low-end
contractors like to save money by using cheap materials. Warped lumber is
cheaper than straight lumber, cheap fixtures look okay but only last a few years,
and watered down paint looks fine for about six months. Cheap “builder
grade” materials are common in mass production starter home neighborhoods,
but you certainly would not want these materials in your dream home. 

Offering a Poor

Unscrupulous contractors even save money by including a
shoddy guarantee (or none at all). They’ll say they have a one-year warranty
hoping that the drywall won’t crack, or the new hardwood floor won’t start
warping within the year, and if you do have a problem, they won’t come back to
make it right. Ask to see a written copy of their warranty. The lowest risk
contractors will offer a multi-year written warranty. This type of contractor
is interested in making sure you are happy with the project for a long time
because referrals are a big part of his business. Quality workmanship will look
good for many years; inferior workmanship done by under-trained and under-paid
workmen will result in a tired and worn look in less than two years. Quality is
measured by length of warranty. 


Here we have looked at five ways bad contractors cut corners
to make more profit, often to the detriment of your home improvement project.
In the fourth part of this series, we will look at a few more methods these
“contractors” employ to cheat you out of your money.