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Standards for Ethical Practice

A contractor who is dedicated to following ethical business practices has made the commitment to comply with the full spirit and intent of all laws and regulations that impact the industry.  On a personal level, practicing ethical behavior and following honest business practices also include the contractor’s relationships with all the parties involved in the construction process.  Among these are customers, architects, employees, suppliers, and subcontractors.

The ethical contractor is the one who believes it is possible to own and manage a successful, profitable business by establishing fair and honest policies.  A contractor may become involved in unethical practices unwittingly through a genuine lack of knowledge about the proper way to conduct business.  On the other hand, some unethical individuals may decide that the only way to be competitive is to conduct their businesses based on dishonesty and deceit.

A major challenge facing many construction owners is their ability to communicate effectively with customers and others in the business community regarding how they conduct their business to provide services honestly and fairly. To help communicate this message, there is the following Contractor Code of Ethics.

10-Point Contractor Code of Ethics

1. We will always provide a detailed cost breakdown before beginning the work.

The primary concern of consumers entering into a construction project is the ability to account for and justify the total cost of the proposed work.  Creating a detailed allocation of costs allows the owner to make informed decisions about specifying the work.  The important factor is that a clear description of costs eliminates many misunderstandings and conflicts between contractor and project owner.

2. We will always provide a written schedule for the progress of the work.

It is not enough to generally assign a block of time to the entire project.  Project owners want the opportunity to follow the roadmap of the progress by being prepared for delivery of materials, waiting time for coatings to dry, scheduling of inspections, and all components of the use of time.  The schedule document, whether a bar chart or a simple calendar page, allows the owners to remain informed about the progress of the work.

 

3. We will always secure a building permit if one is required.

Regardless of the size of the project, the building authority should be provided with an opportunity to review the Health, Safety, and Welfare issues that are addressed in the building codes.  By taking this step, the contractor is assuring the homeowner that the work is being completed under the requirements of the various codes.

4. We will always sign a written contract that includes our cost breakdown, the schedule and the plans.

The importance of a written contract goes far beyond describing the work and the cost to be paid.  Contracts define what action the parties will take when unforeseen events occur.  The care taken to draft a complete and detailed agreement is an invaluable step towards the smooth completion of the project and a strong relationship between the contractor and owner.

5. We will always provide sufficient labor to accomplish the work according to the project schedule.

Perhaps the most frequent complaint of project owners against the contractors is the tendency to not provide workers to the job in a manner to adhere to the schedule.  Contractors subscribing to this principal provide the owners with a level of comfort that work is going forward and the schedule is being adhered to.  When circumstances such as weather and material deliveries cause delays, the contractor will notify the owner of the delay and the revised completion date.  The key element is improved levels of communication regarding the management of the project schedule.

6. We will always leave the job in a clean and orderly condition.

The value of a clean job site is often underestimated by the work force. Not only is the safety of the project site increased by the elimination of debris and clutter, building inspectors tend to spend their time evaluating the work for its care rather than being critical of the lack of housekeeping.

7. We will provide you with a list of the subcontractors that we intend to hire.

A typical remodel will involve numerous subcontractors to perform the countless tasks and provide diverse materials and equipment to the job.  By providing a list of all subcontractors and suppliers, the contractor is informing the owners of the characteristics of the team that will be accomplishing the work.  This has serious consequences when dealing with the administration of mechanics lien rights and releases.  But more importantly, subcontractors and their suppliers provide valuable insurance for equipment failures and consequential damage.

 

8. We will provide a detailed invoice that incorporates a current report of the project budget.

Contractors and owners alike are familiar with the trauma associated with the “final invoice.”  The surprises that occur when all of the accounting for changes and upgrades are totaled are generally associated with the last invoice.  Contractors have a critical duty to their customers to keep them informed throughout the project regarding revisions to the total budget.  Small and seemingly inconsequential upgrades can mount up to a substantial cost if not carefully and faithfully monitored.  Experience has shown that even a diligent change order system fails to inform the owners of the total impact of the aggregate changes that have been made.  With a budget report, line items created in the initial cost breakdown are accounted for on every invoice.  Changes are also reflected on every invoice as soon as the owners elect them.

9. We will compile a booklet of all manufacturers’ warranties for any new equipment we install.

Manufacturers of water heaters, furnaces, thermostats, fireplaces, and appliances provide detailed brochures with instruction, warranties, and maintenance tips.  The contractor will endeavor to gather and bind all of the technical bulletins and brochures and assemble them into a booklet for retention by the owner.

10. We will conduct a walk-through inspection with you and correct any deficient work prior to final payment.

The contractor agrees that no final payment will be made until all unfinished work has been completed.  The contractor will correct any deficient or damaged work according to the agreement between the parties.  Further, since mechanics’ liens are time-sensitive, the contractor will postpone payment of 10% of the contract price for a period of 35 days following the owner’s recording the required notice that a project has been completed.

The Code of Ethics above was provided by William F. Dexter and Mary S. Jones, Esq. of the Malibu Center for Construction Education.  To reach the center for additional information or to order contractor/customer forms that may be available to help the contractor follow the provisions in this Code of Ethics, call:
William F. Dexter, Construction Risk Management or Mary S. Jones, Esq.
(805) 544-0852