Pare down your list
Cost is important, but so are reliability and quality. "Home improvement is among the top consumer complaints," says Gwen Biasi. "Plan to interview at least three contractors to be sure you'll be comfortable working with them. That's as important as cost and, typically, the topic of cost will come up as well."

Good measuring tools include the Better Business Bureau and the local building inspection department. The BBB will be able to tell you how long a company has been in business and whether any complaints have been filed against the contractor. Plus, local building inspectors can tell you what they think of a contractor's work.

Contact the city, county, or state housing authority to find out what licensing and bonding criteria contractors must meet. Scratch any contractor off your list who doesn't meet the requirements.

Armed to interview
Now it's time to ask more specific questions. "Ask questions and follow up. Call references, verify insurance, talk to suppliers," insists Biasi. "Professional contractors will expect your questions and already have the answers at their fingertips. Red flags should go up if they can't." Their responses will help you gage their work and business ethics.

Here are key points to clarify when interviewing a potential contractor:

Full name and address of the company
You want to deal with a reliable company that you can contact readily both during the project and after the work is complete. "You want to work with a credible company, not a sloppy outfit handled from someone's garage," Newton says. Also, it will tell you how close their base is to your home, as you may pay more for services to offset the costs of a longer drive.

Length of time in business
Find out how many years a contractor has worked in the remodeling business as well as how long he's worked under his business name. A contractor just starting doesn't necessarily equate with poor quality. But you'll want to carefully check a contractor's referrals if he's been in operation less than three years. Also scrutinize contractors closely who've worked under a lot of different names -- they may have blotchy work habits.

Liability insurance and workers' compensation insurance
Only hire a contractor who is insured against workers' compensations, property damage and personal liability in case of an accident on your property. This protects you!

Be a stickler -- ask for proof of coverage, then call the insurance carrier to verify that the coverage is up-to-date.

Referrals
Go directly to the source. Ask the contractor if you can visit a current job site or look at a portfolio of completed work. Better yet, request a list of names and phone numbers of recent customers and call them.

"Ask about the quality, whether the job was completed on time, if they maintained a punctual work schedule, were easy to contact and resolved complaints satisfactorily," Biasi says.

Discuss bids
Go into detail with each contractor. You want to thoroughly understand the price factors of each bid offered to you, especially if they differ significantly from the other contractors. Higher-priced materials may mean better quality, and higher labor costs may mean thorough craftsmanship. Hire a contractor based on skill, reliability, understanding of your remodeling job and cost -- not just the lowest price.

Who will do the work
Ask whether the contractor will do the work, his employees or subcontractors. Check whether the subcontractors working on your project are licensed, bonded and insured properly.

Contact his subcontractors and suppliers to verify that he has a good credit history. He needs to pay his bills on time and in full, Biasi says. You don't want to be liable for unpaid work done on your home when you've already paid the contractor in full.

Work schedule
Ask them when they'll start the project and how long they'll need to complete it. But don't forget the day-to-day work schedule: When will they arrive in the morning? When will they quit each day? What days of the week will they work? Do they work on holidays? Will the room being remodeled be in service or out of service?

"Don't take these details for granted. Just ask and make sure their schedule matches your needs," says Biasi.

Take the time to ask each contractor if they have any special training, offer any warranties on their workmanship, and how they handle customer complaints.

Once you're ready to hire, it's time to set up a payment schedule and write the contract.

Set up a payment schedule
The payment schedule -- when the contractor is paid for the work -- depends on the project. Most likely, a contractor who takes one day to install central air conditioning or two days to install ceramic tiles will bill you for payment in full when the job is complete.

Never pay a contractor in full before the work is completed, warns the Better Business Bureau.

A primary contractor who expects to take a month to build an addition onto your house will set up a payment schedule. This schedule may be weekly payments, monthly payments or payments at the end of specified phases. You might consider negotiating a provision for placing your scheduled payments into an escrow account until the work is completed.

Double check your contract to make sure it includes the payment schedule that you understood and agreed on.

Safeguard your home in writing -- get a contract
The written contract is essential for your protection, as well as the contractor's. Read the contract from the nuts and bolts on up. Ask questions about any clause that is unclear. Know what information needs to be written into your contract.

First, verify the basics: the contractor's full name, business address, phone number, professional license number and the starting and completion dates, says Gwen Biasi.

Carefully read the description of the remodeling job. It should thoroughly detail all the materials to be used, right down to quality, quantity, weight, color, size and brand name. You want it to include everything the contractor will and will not do -- the inclusions and the exclusions, continues Biasi.

The debris needs to be removed when the job is complete -- preferably not by you. Your contract should specify how this will be done.

Check for the total cost of the remodeling project, including a breakdown of labor and material charges. It should include the agreed-upon payment schedule. The Better Business Bureau recommends that you request a release-of-lien clause to protect you from liens against your home if the primary contractor fails to pay subcontractors and suppliers.

Any product warranties and workmanship guarantees need to be clearly spelled out. Most reputable contractors offer either a full or limited warranty on materials and workmanship for one year, says Biasi. "Take the time to understand the terms and conditions and length of the warranty. Be sure that you agree to the terms written in the contract. You don't have to feel pressured to accept the terms if you're not comfortable. There are a lot of contractors willing to meet your needs."

Understand your cancellation rights. Federal law requires contractors to give you written notice of your right to cancel the contract within three business days if you signed it in your home and in the presence of the contractor. Ask whether there is a cancellation policy, when it would kick in, and for how much. If you decide to cancel, it's a good idea to send the cancellation form by certified mail.

Finally, never sign an incomplete contract, Biasi insists. And, keep a copy of the signed and dated contract on file.

-- Updated: April 18, 2005