Home renovation: What type of reno contract is right for you?

Dave Wilkes is president and CEO of the Building Industry and Land Development Association (BILD), the voice of the homebuilding, land development and professional renovation industry in the GTA. For the latest industry news and new home data, visit www.bildgta.ca.

If you are gathering information for your upcoming home renovation project, you may have learned that you should sign a written contract with your renovation professional. A contract helps to clarify roles, responsibilities and expectations and protects both you and the renovator. But did you know there are different types of renovation contracts?

Depending on the nature, duration and potential cost of a project, a renovator may propose one of three common types of contracts: the traditional, lump-sum contract; the design-build contract; or the construction management contract.

With a traditional, lump-sum contract, the home owner first works with a designer to develop what the renovation will look like. When the design is complete, the home owner should obtain three quotes from different renovation contractors, for a fixed price to deliver the work based on the design.

Once work has started, any costs incurred, due to changes or errors in the design, may be charged to the homeowner as extras, increasing the final price of the project. These changes could arise from unexpected issues identified during construction, such as essential electrical upgrades. Contingencies can be set up to help offset these extra costs. One more thing to keep in mind is that with the traditional, lump-sum contract, the homeowner manages contracts and co-ordinates any changes between the renovator and the designer.

With a design-build contract, on the other hand, the home owner only needs to coordinate with the design-build contractor, who is hired at the very beginning of the process. The contractor works according to the home owner’s budget and uses his or her staff and network to secure the designers and trades for the project. An additional advantage of this type of contract is that the homeowner can start construction knowing what the final finishes are going to be and can modify them in advance to help keep within the budget.

Finally, with a construction management contract, the home owner pays the contractor for management services apart from the renovation costs such as materials and labor. This means that the home owner is able to make any changes he or she wants during design and construction. The advantage of this type of contract is full transparency of costs.

If you would like to learn more about the different types of renovation contracts, your best bet is to speak with a professional renovator who participates in the RenoMark program. All RenoMark renovators are required by the code of conduct to provide their clients with a written contract. They can further explain the benefits and risks associated with each type of renovation contract.

To find a RenoMark renovator near you and learn more about the RenoMark program, visit RenoMark.ca.

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