Tag Archives: mechanics lien

Don’t Hire a Contractor Unless You Are Willing to Take a Risk

From The Dalles (Oregon) Chronicle December 26, 2017: “A theft report was filed Wednesday morning concerning a theft by deception when a woman reported she paid a contractor $30,000 to build a pole barn on her property by the end of October and no work has been completed.”
Most people assume when they hire a contractor to erect some or all of their new post frame (pole) building or pole barn, they are minimizing their risks.

Let’s define exactly what risk is:
Risk (according to the sum of all human knowledge Wikipedia) is the potential of gaining or losing something of value. Values (such as physical health, social status, emotional well-being, or financial wealth) can be gained or lost when taking risk resulting from a given action or inaction, foreseen or unforeseen (planned or not planned). Risk can also be defined as the intentional interaction with uncertainty.  Uncertainty is a potential, unpredictable, and uncontrollable outcome; risk is a consequence of action taken in spite of uncertainty.
Risk perception is the subjective judgment people make about the severity and probability of a risk, and may vary person to person. Any human endeavor carries some risk, but some are much riskier than others.

Now, gentle reader, please pay attention to, “risk perception is the subjective judgment”. Subjective judgments are made without clear analysis of objective facts.

Hiring a contractor is a game of chance, there is risk involved. Significant risk.

Numerous possible outcomes are the resultant of hiring a contractor. The ideal outcome is everything went perfect – the project was completed satisfactorily, the building successfully passed all Building Department inspections, it was built according to the engineer sealed plans, there were not cost over runs and it was built in a timely manner.

Back in the day (the 1990’s) I participated in a contract writing class for building contractors put on by the WBMA (Western Building Materials Association). The course was taught by an attorney. The attorney prefaced the discussions by saying if we (the contractors) had over 50% of our clients satisfied with our work, we are doing extremely well.

Let this sink in – 50% satisfaction as a benchmark for success as a building contractor?
So, what happens if the outcome is less than ideal?
The worst case is paying for a building and getting nothing.
Other less than fun outcomes include (in no particular order); Some or all of the building is completed and mechanics liens get filed on your property due to the contractor not paying his or her suppliers or the help. The building won’t pass inspection and/or was not built to the engineered specifications. The building has warranty issues the contractor will not or cannot fix. The building gets partially built and contractor absconds with more money than earned. The building collapses – killing you or a loved one.

Scared yet?
YOU SHOULD BE!

How to minimize risk:
Demand your building be constructed according to plans prepared by an RDP (Registered Design Professional – architect or engineer).

Invest in a complete building kit package per those plans, it avoids potential material liens and you can control the design.

Vet potential contractors fully, by following these steps: http://www.hansenpolebuildings.com/2013/07/contractor-6/.

Require a Performance Bond from the contractor you select: http://www.hansenpolebuildings.com/2012/07/contractor-bonding/.

How big a risk are you willing to take?