Construction Audit Protocol
Contractor Bid Evaluation & Change Order Cheatsheet
🛡️ Pre-Hiring License & Insurance Audit
- ✅ State License Verification: Verify active status with state licensing board (zero complaints).
- ✅ Certificate of Insurance (COI): Require \$1,000,000+ General Liability + Worker's Compensation.
- ✅ Additional Insured: Request homeowner named as "Additional Insured" on the COI policy.
- ✅ Subcontractor Coverage: Confirm all trade subs (plumbing, electrical) carry verified coverage.
💰 Milestone Payment Draw Schedule
- 🚫 Never Pay >10-15% Upfront: Cap initial deposit to state statutory limit (e.g. \$1,000 in CA).
- ✅ Milestone 1 (Rough-in): 30% upon foundation, framing, and passing municipal rough inspections.
- ✅ Milestone 2 (Drywall/Finishes): 30% upon drywall, paint, and cabinet installation.
- ✅ Final 10% Retainage: Released ONLY after final building inspection sign-off and punch list completion.
📜 Scope of Work & Fixed Price Contract
- ✅ Fixed-Price vs Cost-Plus: Insist on a detailed Fixed-Price contract with itemized materials.
- ✅ Allowance Traps: Ensure finish allowances (tile, fixtures, flooring) match realistic retail prices.
- ✅ Lien Waivers: Collect signed Conditional & Unconditional Lien Waivers with every milestone payment.
⚠️ Change Order Protection Protocol
- 💎 Written Approval Required: Zero unwritten change orders. All cost revisions signed in advance.
- 💎 Itemized Cost Breakdown: Requires labor hours + material invoices + contractor markup %.
- 💎 Timeline Extension: Must specify exact calendar days added to the substantial completion date.