Larry’s Rant #2
Time for chapter two. Thanks to all for the compliments on my first rant, and thanks to all the people who have given me more information to include in this new installment. Don’t worry, no names will be mentioned. The first thing I want to talk about is the difference between licensed and unlicensed contractors. Oh, I know, lots of unlicensed contractors do great work. There is no impediment to anyone doing good work. But the odds of a guy who won’t take (or can’t pass) the contractor’s license test doing a good job have to be less than a licensed contractor. Licenses are granted to ensure both minimum standards, as well as to give standards for contracts and how work is to be done. Example? I had the pleasure of seeing a homeowner hire a licensed contractor who botched the job badly, and the contract was so unclear and incorrect that the contract was voided, refunding the entire contract amount to the client. Sure, the rules can seem silly. The mechanic’s lien law is hardly useful for small dollar amounts that you can deal with through State Licensing procedures for arbitration (max $50,000) or even small claims ($5,500). But an unlicensed contractor has no license to be revoked by the state, and has to be sued. Mechanics Lien law doesn’t apply. No license bond. Try suing your typical “Fly by Night” unlicensed contractor, if you can find him. A licensed contractor can be disciplined by the state board, and believe me, a legitimate contractor will jump though fire to keep his clients happy, and keep his license clear. I had a client who had a complaint, didn’t call me but called the State board. I fixed his problem quicker than stink on you-know-what, not that I wouldn’t have anyway. Sure gets your attention, though, when the State board calls you. Note to customers-CALL ME with ANY questions! But I digress. It’s just that when unlicensed contractors become more common, it is harder for the legitimate guy to survive, and while the customer may be ok, often the cost ends up being more. Either that guy hurts himself and sues you, doesn’t do good work, or leaves the job uncompleted. Which means I get to clean up the mess.
So you hire a licensed contractor. A Contractor who has no employees can file an exemption to Work Comp with the state board, and therefore has no expensive insurance driving up prices. But performing many kinds of work is labor intensive. It’s hard to install a full new foundation on a house by yourself. And, if he gets hurt on your job, you may be waiting to get your job done, or you may get sued for his damages. Or, he has a guy helping him, working for cash, and he gets hurt. You get sued. It isn’t right, just reality. He may have TOLD you he had workman’s comp. Did you check? Great, you checked! He has the proper insurance! (Want to know how to get around it? I mean, if you are a contractor that feels like your guys will never get hurt, hate paying premiums, use guys for a day at a time, etc.? Buy a policy, put only your secretary on it, and pay cash to everyone else. Sure, you may get caught, but with work comp rates at 50-100% of payroll cost for some trades the money can be enormous) All fun and games till someone gets hurt. The legitimate guys are hoping the system gets fixed before we all lose our shirts…Go Arnold!
Want a story about Work comp? I know of a guy using a “temp” worker on a job. The guy slips off a ladder, falls through a window. Almost lost his hand. The worker is screwed. The guy is gone, out of business. Customer has an unfinished job, possibly a lawsuit, all for a job worth $1,000-2000, so he saves $500 bucks? Not when he pays to have it finished.
It all adds up to a playing field that is not level between legitimate contractors and unlicensed/unethical contractors. The money to be made playing it fast and loose with the rules makes it tempting. The costs incurred by the legitimate contractor means higher costs to the consumer. So, the consumer who takes on the risk gets higher returns. So, if you lead a charmed life, use that guy that’s cheap because he’s unlicensed. I won’t go into Society’s costs that occur when the worker goes into the emergency room, and the bill is paid by all of us instead of the insurance.
Have I tweaked your social conscience? I can’t offer solutions to the big problems-just protect yourself as best you can, use a legitimate contractor, check license and references, etc.
Not to say a legitimate contractor can’t be a problem. Here’s another horror story for you. I just bid a job that was to finish what one of my competitors started. (Remember, I said I wouldn’t mention names). The job has been sitting for a YEAR! Heck, the client had a baby during construction that’s talking. His first words? “Contractor’s Suck!” The original job was for $65,000. The Contractor had been paid $29,000, had done all the supporting and most of the excavation, but left the job. He got sick; his wife left him, etc. In pricing the completion, I believe the real reason is that he was going to lose his rear on the job. He even offered to supervise the job and let the homeowner hire the workers directly-for a fee! So the client uses laborers from the Home Depot parking lot? Once again, the risk is on the homeowner.
Why am I telling you all this? To scare you into paying over and above what is considered a competitive amount for a project? Frankly, you all don’t have a clue what kind of costs I have, and I’m not talking about boats and planes. I’m not complaining, frankly, you just don’t want to know. The saying “You get what you pay for” is never truer than in construction. A contractor is a middleman, if you will, between suppliers of materials and the laborers who supply labor when they perform the work, as well as subcontractors, and the customer. The costs for materials and labor can vary greatly between contractors, not because we get better prices, but in how we do the work. Then there is the overhead I mentioned above. I provide basic benefits including health insurance, dental, retirement, etc. I do this both to take care of my employees, but also to retain quality employees longer, and to improve both quality and performance. The bottom line is I am attempting to retain employees, who do a better job because of their experience on my customer’s project. Now, compare that with a contractor who pays similar wages, without paying any benefits. His guys may or may not perform as well, may quit sooner, (and he avoids paying raises to long term employees) and he can charge less. He gets more call backs, performs work in a more haphazard manner, and has more problems. The customer ends up paying by assuming more risk. So my costs are higher than his, and I cannot compete on price. It’s all relative. I choose not to be the low cost/low quality “supplier” because I want to do this for 20 more years. Thankfully, I know I am not the only person who desires quality.
Now having said that, PLEASE don’t beat me over the head with it. I admit, the business I’m in means that mistakes will be made by anyone and everyone, including me. My guys try hard, and we train constantly, but still things can go wrong. Everybody has an off day. But I believe it is how you react when things go wrong that is the measure. Anything can be fixed. I look at old houses every day, and it is rare that I see something that isn’t worth getting fixed, and a job done wrong can be redone. Our methods and practices improve every day. Codes become tougher, not because the City wants to mess with us, but because there are better ways to do things.
If I have advice to give you, it is just learn about your project before hiring a contractor. Learn about the processes, and get several opinions. Think about all the work you want to perform so your do repairs and upgrades in the proper order. And use common sense. Protect yourself as much as possible with knowledge. The California State Contractor’s Licensed Board has a website ( www.cslb.ca.gov ) that will give information both on specific contractors, as well as great information about hiring a contractor. Think Quality!