Is paying a contractor by the hour practical, or asking for trouble?
There is no easy one size fits all answer here.
Most of the time the answer would be no. A contractor that only works by the hour is often a red flag. There are circumstances in which a contractor and homeowner may decide doing a job by the hour is the more practical solution although it would be a rare decision that would be made between the contractor and the homeowner with a contract.
A few years back the answer would have been no. Period. But now that I have expanded into restoration I realized that there can be circumstances where by the hour is the more practical solution.
When "by the hour" might be the answer
Let me give you an example. I currently have a crew on a restoration job that is in such bad shape that there is no cut and dry solution. I can see much of the damage but there is also damage that might be there that I cannot, and possibly not be able to see till we start tearing stuff up. On this job, a by-the-hour solution was the best. If I gave the homeowner a set price and we ran into huge expensive repairs It would either cost my company money or I would have to re-negotiate the contract which can leave a bad taste in the homeowner's mouth. Our solution was by the hour plus material. Each week we keep up with every employee's hours and with all materials, and we ad 10% for overhead/profit. We gave her a rough estimate of 2 weeks and right now we are ahead of schedule and have not run into many extra problems.
If you decide this solution is in the best interest of the job make sure there is a contract and it needs to be detailed with the entire process spelled out so there is no question as to what is being done and for how much!
When By the hour is NOT the answer
This will be MOST of the time. I rarely suggest by the hour and it's almost never the way to pay. Here is why.
Most people who are going to suggest a by the hour job are going to be a handyman or a " jack of all trades, master of none". They rarely if ever have a contract or a work ethic. I am not saying that a handyman is bad or has bad ethics but of all the complaints I see on social media are this very complaint. If you decide to hire a handyman (they will most likely be your lowest bidder) so do your research. Later I will do a post on red flags that will help you sort out the bad from the good.
Back to the subject. If a contractor is good and gets the job done quickly, he will be shortchanging himself. If a contractor is not so good but gets it done quickly you risk getting a shoddy job done. A straightforward job is an easy bid. The contractor knows what his labor is worth and knows how much material he needs. He calculates all of this into a bid. If you have a contract with him and he takes longer than expected he loses money. On the other hand if you contract him by the hour you are stuck with the extra cost if it takes longer than expected. Paying by the job is a great motivator to get done on time.
Often a person who likes getting paid by the hour has a tendency to work slower, but not better. They will drag their feet and find excuses, and the less you are paying the longer it will take. What do they care? mistakes that have to be done over means more money for them.
Most likely a person who likes working by the hour will not have a license where needed, insurance, or workers' compensation. If he happens to get hurt on the job and you are paying by the hour you will be stuck with the bill as he will be considered a domestic employee. OUCH!!!
Also a contractor willing to work by the hour for "cash" may not have required work permits, licenses, citizenship, or may not be of legal age to work. All of these could be an expensive fix if something goes wrong.
Most likely he will also not "need" a contract as his handshake is his word. This is the #1 way homeowners lose money. Always have a contract!
If you would like to add anything I forgot or have any questions feel free to post them here.
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