Balancing the Risk Equation

The remodeling equation contains many variables: existing construction flaws and limitations, homeowner tastes and expectations, changing codes, staff and subcontractors with different approaches to their work. Yet the outcome cannot vary: an attractive, durable home or building, a satisfied customer and a healthy profit. With rising costs, expanding regulation and increasing expectations from homeowners, getting the two sides of the equation to match up has never been more challenging.

Quality control that addresses not just the what of remodeling but also the how is the key. Here's a look at just a few ways that quality systems help remodelers achieve quality construction.

Set expectations with clear contracts
First things first: Besides having a homeowner contract on every job, make sure you sign a contract with every subcontractor, ideally on every job. A detailed scope of work sets clear, consistent expectations that ensure efficient, accurate work from subcontractors while enhancing the customer experience. Stephen M. Phillips, general counsel of the National Roofing Contractors Association, recommends a comprehensive written contract regardless of job size.

"Whether the job is $100,000 or $10,000, the same issues are going to come up," says Phillips. "Let's say a roofing contractor sees a lot of deteriorated wood under the shingles - is he supposed to stop work and get approval to fix it? If you don't have a procedure outlined in the contract, there will often be a dispute. They'll say, 'We didn't include that in our pricing,' or they'll just cover it up and the deteriorated decking is still there."

For just that reason, Payne/Bouchier, a $10 million high-end Boston remodeling and custom cabinetry firm that specializes in large whole-house jobs, has detailed scopes of work with every subcontractor. In addition, says principal Stephen Payne, subcontractors need to know how to work with wealthy clientele and their expensive property.

"As part of our standard scope on any demolition subcontract, we have some standard language that refers to dust control and neighbor relations," Payne says, for example. Those contracts require removing and protecting original front doors and replacing them with solid-core, black-painted doors during demo. As the scope of work changes during a remodel, the project manager distributes updates to subcontractors by e-mail or fax.

Contracts also should reference specific standards for completed work. In addition to code requirements, many remodelers use NAHB's Residential Construction Performance Guidelines for Professional Builders and Remodelers. The book outlines acceptable parameters for every aspect of the home throughout the warranty period, from foundation to finishes, and notes corrective measures remodelers should take when deficiencies are found. For example, it says that wood and hardboard lap siding cannot be more than 1/2 inch off parallel in 20 feet - unless the remodeler and owner have agreed to a different standard because of a pre-existing structural issue. The manual calls for contractors to reinstall (or replace if necessary) any siding not meeting the standard. Contractor and homeowner versions are available online at BuilderBooks.com.

Geoff Horen, CEO of the Lifestyle Group in Indianapolis, uses Quality Assurance Builder Standards, a manual developed by the Builders Association of Greater Indianapolis that members have been required to use since 2000. He gives every client a copy of the book with the contract. For the Lifestyle Group, having written construction standards works more as a sales tool than as legal protection.

His employees and subs typically exceed the manual's standards, says Horen. Even so, if a customer identifies a "flaw" that meets the standards - such as a drywall blemish visible only within 2 feet (the standard is 6 feet), the crew usually fixes it. However, adds Horen,he still points customers to the manual so they know "we're going above and beyond what we should do."

Including the manual in contracts helps him define "reasonable." "One of the biggest challenges we face is that term 'reasonable,'" Horen says. "People could be paying $2,000 for a project, but that's so much money for them that they're standing there with a magnifying glass looking at that wall."

Paper trails improve - and prove - processes
Job descriptions, operations manuals and on-the-job training give employees a good idea of how things are supposed to be done. In the field, though, workers often encounter situations that call for a deviation from the "norm." Keeping track of the reasons for these deviations and the actions taken instead can help your company identify and prevent recurring problems, improve communication on the job site, increase the likelihood of getting affordable insurance coverage and protect the company from legal harm.

Quality control in Payne/Bouchier's cabinet shop is relatively easy because cabinet making takes place in a controlled environment, says Payne. Still, a couple of recent missteps led the shop manager to hold a meeting to introduce new tracking systems and discuss accountability. In one case, components of a cabinet system arrived on site without having been biscuited as usual. Without having an explanation for this irregularity, the field crew raised a red flag. "The cabinetmaker would not have been second-guessed if he had written assembly instructions and explained his rationale," says Payne.

In the field, Payne/Bouchier uses detailed, up-to-the-minute drawings to ensure construction quality. For example, the company found that even the best plans from outside architects often lacked sufficient staircase detail. As a result, Payne/Bouchier formalized standards about how treads intersect newels, the distance from the centerline of the handrail to the edge of the tread, and other framing concerns. Starting with AutoCAD files created in-house, project managers now can work with architects to incorporate custom design elements into the standard stair package.

Proof of quality control systems has the added advantage of making your company a more desirable client to insurers and potentially reducing your company's general liability and workers' comp rates. Some insurers even audit offices and job sites in person for evidence.

"We had one company that would not even quote until they did a safety inspection," says Doug Sutton, president of Sutton Siding & Remodeling Inc. in Springfield, Ill. "He went through the offices, the warehouses, talked to the principals, went to job sites."

To prove that the com-pany engages in safe practices on a regular basis, not just during audits, Sutton has a written safety manual, re-quires employees to sign attendance sheets at weekly toolbox talks, keeps material safety data sheets on file in company trucks, and keeps copies of subcontractor agreements and certificates of insurance in the office.

The company maintains a significant paper trail for every project and customer, with job files dating back to the 1950s. Employees note every site visit, job inspection and customer call on a job worksheet, with weekly printouts going to the office, the supervisor and the on-site carpenter, and a digital file kept in a master database. On insurance work and other large renovations, Sutton takes pictures of the job before and after production, and at inspections. This extensive documentation helps the company protect itself against legal claims and prove its quality to insurers.

"It's very difficult for the small guys who work on job sites every day to be able to do this," acknowledges Sutton. "Insurers expect everyone to follow the procedures; there's no preferential treatment based on size."