How do you pay your contractor? There are several ways you can pay a contractor; by the hour, cost plus, or draws. Which ever route you take, get a signed agreement for your protection.
When you select to pay by the hour, just beware that a job can be stretched out. Some contractors will quote you “x’ hours at a price per hour. Once they start the job, they might come back and tell you it will now take them “xx” hours to complete the job. You might end up paying a lot more than you initially bargained for. This is some times referred to “milking you for whatever they can”.
Cost Plus on the other hand is an agreed upon percentage added on top of material, labor, etc. For instance, you are building a shed for 10% over all materials to build the shed, the contractor building the shed, the electrician adding the electrical work, the plumbing, and so on. If you go cost plus, make sure you see all receipts, time cards for labor, invoices, etc. and they are for YOUR JOB ONLY.
Draws are normally done on a larger job, like remodeling or building a home. The draws can be done between owner, and/or owner/financial institute. If done through a financial institute, it is typically approved by owner and financial institute. Draws are based on completion of work. Typically a Contractor/Builder should have a preliminary schedule of work to use as a guideline. Normally, your draws should not exceed more than 2 a month.
Never pay someone up front, without the proper agreements, referrals, proof of registration as a builder, or signed contract.
Always look at the Texas Residential Commission Construction site for registered builders ( http://www.trcc.state.tx.us or Call 877-651-TRCC),
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