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How Do I Not Over Pay My Contractor?

The renovation marketplace is alive and well


According to an article in the Financial Post printed July 4, 2017, renovation spending in Canada will reach $72.7 billion in 2017, up from from $71.2 billion in 2016, and climb to $74 billion next year. The entire new home market was worth only $53 billion showing that we are spending about $1.33 on renovations for every $1 we spend on new home construction.

So, it seems that because the demand for renovation services is significant, an opportunity for even a less qualified, less reliable construction practitioner is available. Some of these individuals are very persuasive, appear to be good people and who might look like they deserve our trust. However, having a more detailed understanding as to how to qualify them is required by homeowners before engaging a contractor and handing over their hard earned cash. 


My contractor doesn’t have an online presence

In our experience, customers do business with people that they know, like and trust. With our digital footprint, customers know a lot about us before we meet face-to-face. In this day and age and with the digital world being readily accessible, We would think someone without some sort of up-to-date digital footprint may have something to hide – but not always.

In defence of the general contractors, they are not banks or finance institutions and should not be obligated to carry for a prolonged amount of time, any financial weight as it relates to your project. In summary, the following is what we think might be a fair and equitable system for the release of funds to general contractors for small or medium size projects.


  • Insist on a fix priced contract rather than a time and materials, cost plus fee arrangement.We are sure there are arguments that support the fact that you save money when a time and materials, cost plus fee agreement is used. However, the majority of grievances expressed to me by homeowners have been experienced whilst under a cost plus fee agreement.
  • To support a fixed price contract, a list of specifications clarifying what is, and isn't included should be detailed. Further to that, a start date as well as a completion date should be nominated. 
  • Stage claims made in percentages of the contract amount is the most secure way for the homeowner to ensure they get what they pay for. Initially, a maximum of 10% should be handed over at the signing of the contract. How the remainder of the funds are to be distributed, should be determined by a payment schedule and in percentages relating to the amount of work completed. Other influencing factors would include project duration, types of materials used and degree of difficulty. (If you can avoid it, never pay using cash)
  • Be sure to hold back the appropriate amounts required by the Contractor's' Lien Act in your province; contact your provincial government or your lawyer for information.


What’s the best outcome

A completed renovation having a favorable outcome for both the general contractor and the homeowner is preferred. Trust is important but having the majority of the grey area removed minimising the ambiguities is a priority. This should be championed by the general contractor as they are the ones operating in this arena every day.

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