Signed, sealed, undelivered

PUBLISHED : Wednesday, 14 May, 2008, 12:00am
UPDATED : Wednesday, 14 May, 2008, 12:00am

Having heard horror stories about home renovations when Hong Kong resident and HR professional Rachel Autherson began hers, she sought to protect herself by employing a contractor recommended by a friend. But, as with many things in life, it didn't turn out as she hoped.

By the end of the process, she and her partner felt used and violated by the lack of professionalism that went into the work. When they finally moved in a week before Christmas, the stove and toilets were not yet fitted, and the bathtub leaked. Their granite countertops were gouged and new wooden floors scratched.

It would take a further four months of wrangling with the contractor to correct more than 150 problems, defects or errors, and in the end she said, they were unable to reach a resolution. They had already paid him 90 per cent of the total cost and he was demanding the full payment for additional work that had not been completed to their satisfaction.

'We just wanted him out of our lives, so we paid him most of the contract price,' she said. 'He got away without finishing the job.'

Few things scare homeowners more than hiring a contractor to oversee a renovation. The prospect is exacerbated by an expatriate's lack of Cantonese-speaking skills and the perceived belief that they are getting ripped off.

Yet, the contractor for this project was a German expatriate and Ms Autherson accepted his quote because he was on time for initial meetings, the quote was prompt and detailed, and in the beginning communication was good. Unfortunately, that changed when things started going wrong. Then, no amount of English could help when he stopped taking her calls, replying to e-mails or showing up on site.

Despite Ms Autherson's experience, industry professionals say when choosing a contractor recommendations are key. Or, hire a designer to oversee the entire renovation process for you and let them vet the contractors.

First, make sure you are comparing similar projects, advised Ms Autherson. 'The contractor had been recommended after he completed work on a friend's small investment property; on reflection the quality and time-scale of this project was quite different from what we needed.'

Simon Damman, an Australian expatriate contractor and director of OzWorks, said you should get quotes from three contractors.

In Ms Autherson's case, she invited six, but only one submitted a quote. She thinks this is because she only had a modest budget.

'Contractors can pick and choose from the most expensive projects, where the margin is higher,' she explained. 'Most didn't seem interested unless we were going to spend close to HK$1 million.'

And don't be afraid to be detailed. Normally, when preparing a quote Mr Damman surveys the home carrying a standardised check list for each room. He discusses each area point-by-point with the client. Depending on individuals' needs he can cross out certain points and add others, until they have a complete draft. He then gives a quote.

He suggests you test your working relationship when you get the quote. Ask how long they've been in business - two to three years is the minimum. Ask to see the contractors' previous work. Of course they will only show you their best work, but you can check up with the homeowners on your own. Find out if they completed the work on time or if there were any problems.

Ask if there will be a supervisor on site at all times with whom you can discuss issues that might come up. And make sure that this person is an employee of the contractor, as are all the workers. It is perfectly legal for the contractor to subcontract a project to a new contractor and to lease workers. There is very little accountability in these cases.

Ask how many projects he has running. Contractors should not have more than three projects running at a time. More than that, Mr Damman said, and they would be spread too thin. The next step in securing a contractor is to review the quotes. Ask yourself the following: Can I afford it? What will the quality be? Will they finish when they say they will?

The first consideration, timing, is considered the biggest problem that people have about contractors' work, according to Roderick Murray, director and designer of RJ Murray Design.

'People paying a mortgage and rent need the project to be finished on time - when the contractors say it will be finished. If not, then it is a problem,' said Mr Murray who has 14 years of experience working in the industry in Hong Kong.

'Very rarely is a job finished on the exact date,' said Mr Damman. He recommended giving notice on rent and storage facilities up to two weeks past the contractor's completion date.

The second consideration for the quote is affordability, which is also related to timing. Building a timeline for work completion into the contract may help motivate the contractor. If he doesn't finish on time, he doesn't get paid. In fact he could be penalised. 'That way if the time does run over you can book yourself into a hotel and know you don't have to pay for that,' Mr Damman said, referring to the possible HK$5,000 a day or a percentage of a job you can identify as the penalty in the contract.

Be aware however, that the contractor won't always agree to this.

'They have so much work they can pick and choose. If you ask for time penalties, they may not want to work with you,' said Ms Autherson.

Staggering payments also provides leverage, because once you pay the contractor there is little incentive for him to finish the work.

The industry standard in Hong Kong is to divide payments: 30-30-30-10. The first payment is for the deposit. Since the contractor needs to pay for materials and workers, he will need money up front. But the deposit is negotiable. Expect to pay between 30 to 35 per cent up front, said Mr Damman. Make sure that you tie subsequent payments not to a date but to the completion of tangible objectives. Ms Autherson said this was one of their biggest mistakes.

'While we agreed to pay in stages, in practice we'd paid 90 per cent before we saw the quality of the finish. Once we became aware of the problems, we had no leverage.'

The final 10 per cent is paid after a 'defects period' which can vary between three, six or nine months.

Provision of a defect period is a worldwide industry standard. It is a time when you move back in and can see what areas need to be fixed.

The last item to review in the quote is the ability to get the quality you want and can afford. Experts agree that you will likely have to sacrifice one for the other.

How can you fire a contractor who is not performing?

'With difficulty,' said Mr Murray, noting that it was expensive to hire another contractor to finish the work.

Since there is a written contract, homeowners must have photos and documentation to back up claims.

In retrospect, Ms Autherson said that if they were to renovate again, they would only appoint a top contractor. One she knows of has a one-year waiting list.

'I'd wait,' she said. 'And, I'd pay.'