The marvel, of course, is that anything gets built at all. So much can go wrong-and so often does-that topics of discussion about remodeling or building one's own home often degenerate into stories of unscrupulous contractors, costly delays, shoddy workmanship, and legal battles. But then, success stories are not as much fun to tell as horror stories.

There are, however, many success stories. Home contracting, like any other profession, has its small share of people who do more harm than good. But a good contractor can be your partner and advocate, lead you through the red tape and minutiae of sub-contracting, and help you realize your dreams of home building or remodeling.

It's daunting even to think about building a house. The overwhelming amount of detail that goes with it sometimes drives people to abandon their dream early on or stop halfway through, disillusioned and in debt. Like anything else, however, once the components of home contracting are broken down, it starts to look manageable.

But in order to see your dream-house realized, you need to start with a realistic and complete view of the home contracting business. Like a house itself, each step in building or remodeling leans on steps that go before and after it. The big picture must be filled in with details-details that, in most cases, only a good general contractor can supply. But any contractor worth his salt must also be able to see the big picture. And the big picture is what you supply.

Let's begin, then, with a quick journey through the contracting process-much like those time lapse videos where a house goes up in a matter of minutes. If you're thinking of building or remodeling but only have vague ideas about what you want, then-for the moment-keep those ideas vague. You're still envisioning something that only you, as yet, can see. Details will change. Whole rooms and designs will change. But for now, you'll want to know enough to feel comfortable talking with a general contractor.

The time-lapse camera is focused on a parcel of land, but nothing happens for several seconds. So much has to be done before even the first physical step of excavation can start. Off-camera, you have met with an architect or designer, possibly even a landscape architect and interior designer. You have seen your dreams realized on paper, but now it's time to talk with someone who can put those plans into effect: a general contractor-sometimes referred to as a "GC." This is someone who will be handling all the supervision and coordination of sub-contractors for the project. Typically, you can expect to pay 10% to 25% of the total cost (of labor and materials) as a fee to a general contractor.

That percentage is why some people choose to do their own contracting. The decision is a purely personal decision, but it must be informed and with a full understanding of the duties and responsibilities you are taking on. Home building or remodeling is a significant undertaking. You have to consider not only your own knowledge and expertise, but the amount of time you can commit to the job, whether you have all the necessary licenses and permits to act as a general contractor, and if the amount of money you save is worth the time and effort you put into it.

Full-time general contractors offer economies of scale with time, materials, and experience in dealing with various sub-contractors-experience being the most valuable asset. Suppliers of materials, however, seldom will give the kind of deep discount to a do-it-yourselfer as they would to a full-time general contractor; so what you save in paying a general contractor, you might end up paying in the cost of materials anyway.

Another consideration in acting as your own general contractor is in hiring sub-contractors. You probably don't have a working relationship with electricians, plumbers, carpenters, masons, and other trades people in your area. Instead of hiring one general contractor, you're now in the position of having to hire ten or more sub-contractors, and you have to get bids and evaluate each one of them-something that a full-time general contractor has already done many times over. A good general contractor should know who does the best work at the best price, and you won't have to be involved in that hiring process (although you should have some idea of who the general contractor will be hiring).

One alternative to hiring a general contractor or acting as your own is to hire a "construction manager", the main difference being that a construction manager does not assume responsibility for the overall management and coordination of the project. You assume that role. You'd be responsible for hiring sub-contractors, dealing with suppliers, etc., but the construction manager would help in these decisions and act as an on-site supervisor to manage the work. Still, you'll be paying typically 10% of the construction costs for a manager of this type, so it might not save you much money over the life of the project.

So, how does one find a general contractor? Aside from the phone book, the best way of obtaining a listing of general contractors is from a local building association or Better Business Bureau (in fact, you should always check with the Better Business Bureau for any contractor before you sign a contract). From there, you can start making phone calls and compare the various companies. In most cases, however, this is not a very time-efficient way of choosing a contractor.

One good way is to watch your own neighborhood-and go to neighborhoods similar to yours-to look for contractors working on job sites. A polite, brief, introduction is adequate to get a business card and a description of their services and availability. If you are dealing with a large general contracting firm, then the person you talk with on-site might be referred to as the "project manager."

Once you've narrowed your choices down to three or four contractors, and you've talked with each, ask for bids and references. Some contractors, especially in a hot building market, might say that they never bid on home projects, but rather build by a "design/build" contract structure, where once you decide to go with their firm, they are responsible for both the design and building phases. This has its advantages in that these are usually reputable firms who have a lot of experience and frequently have their own in-house designers. This can save you some money. However, it also doesn't usually give you the most flexibility or best cost-effectiveness. And you might not be able to walk away from a "design/build" contract with at least the design blueprints to take to another contractor.

For most remodeling and home building, you will be comparing contractors and analyzing their businesses and bids. But how do you know what a fair bid is? How do you decide that a contractor knows his business and is presenting you with an accurate picture of what the building or remodeling will cost and the professionalism and quality of their work?

One way is to review (on your own and with each contractor) what is referred to in the building industry as the "sixteen divisions." This is simply a way of dividing up the work and materials into sections so that nothing is left out and no surprises come up during the building. Also, when you first start shopping for contractors, if you make them aware that you're familiar with the sixteen divisions, they'll know that you have at least a basic understanding of how the building process works. Not all building or remodeling jobs include all of the sixteen divisions, but it's how most contractors organize their work. Below are the sixteen divisions and the work and materials (and a few problems) associated with each:

1. General Conditions: This is all support costs associated with a project such as insurance costs, permits, job-site trailer costs (utility connections), portable toilets, dumpsters, office administrative expenses, and other miscellaneous expenses. Be sure you ask what the general contractor includes in this category as it can be a catch-all for anything he wants to add to a project.
2. Site Work: This is the preliminary excavation, filling, and leveling that might need to be done before a project begins. Roughing-out of landscape features is also done during this stage. Problems that can arise during site work are many, including hitting sewage, electrical, or gas lines that can delay and sometimes even halt construction. Before excavation begins, be sure the contractor has contacted the local authorities to determine if any city or county lines run under or near the house. Also, make sure you and the contractor agree on any plants or trees that need to be protected during the project.
3. Concrete: Foundations, footings, and floor slabs are the common uses of concrete, but you might also need it for fuel tank or motor-home pads, pools, walks, or curbs. Weather plays an important factor in the pouring of concrete, so this is a stage that can often be delayed.
4. Masonry: If you have brick or block foundations, fireplaces, or other structural or veneer installations then qualified masons will be employed. The primary complaint about brick-laying is in the brick itself. Be sure you've inspected the brick that the contractor has ordered to match the color and texture you've chosen.
5. Metals: You may have steel framing or decorative metal elements in the building.
6. Wood and Plastics: This comprises the wood framing stage, including sub-flooring and decks, but also shelving and finished carpentry details such as kitchen cabinetry. The contractor should give you an idea of the grade of lumber to be used. Also, inquire into the expertise of the carpenters scheduled to do the trim and detail work.
7. Thermal and Moisture Protection: Any new building or remodeling will need to include insulation, waterproofing, sealing, siding, and other plans to keep the external elements out while at the same time allowing the house to breathe and prevent mold on the inside. It's not just the walls that needs insulation, but foundations and ceilings as well. Siding is a major decision, whether it be stucco, brick, clapboard, aluminum, vinyl, or any countless other sidings. This can add or save a lot of money on the project.
8. Doors and Windows: There's a lot here to decide on with a contractor including types of windows and doors, ventilation, sealing, hardware for doors and key and lock systems.
9. Finishes: Be sure to discuss painting, wall finishes, tile, countertop, veneer, and any sound-proofing needs you might have. Coordination of interior design and colors will have to be done either between you and the contractor or between the contractor and an interior designer.
10. Specialities: This generic category includes any bathroom accessories, shutters, pull-down stairs, handicapped accessibility, and even mailboxes.
11. Equipment: Another general category, but contractors use it for general applicance installation, garage door openers, kitchen and laundry equipment, and safes. Be mindful that the installation of large equipment must keep in mind the dimensions of rooms so that you can actually get the piece of equipment into its appointed space.
12. Furnishings: This is the interior decorative elements such as window treatments and anything that's not permanently attached to the house. This may not even be relevant to most building projects, but if you're using a general contractor to design, build, and furnish the entire house, then this is another category to watch.
13. Special Construction: This is often a separate structure from the main house, such as a greenhouse, sauna, or steam room, but can also include darkrooms, exercise rooms, and home theaters. While this is on the high end of things, it's something that a qualified general contractor can handle and is sometimes an expert in.
14. Conveying Systems: Specialty items such as wheel-chair lifts, elevators, dumbwaiters.
15. Mechanical Systems: This is the respiratory system of the house, its plumbing, fans, air-conditioning, water heating and filtering, and even solar energy systems, if relevant. Be aware of insulation requirements for pipes to prevent heat loss and increase energy savings. Also, there are several options available now for heating water including boiler or furnace with a fuel source of oil, natural or propane gas, electricity, solar, or wood.
16. Electrical Systems: This is the central nervous system of your house and includes electrical service, controls, lighting, receptacles, communication and computer systems (wireless and Ethernet lines), thermostats, and fire prevention systems. There are a lot of code specifications that your contractor can talk to you about, but personal preferences also come into play including making sure you have the wall jacks where you want them.

The "sixteen divisions" are a good way of organizing the work and materials that go into a building or remodeling job, but there's also a personal side to working with a general contractor. For some people, this is the deciding factor-though too often people regret hiring a contractor solely because he "seemed nice." The contractor must be experienced and competent, but he also must be able to work with you over a sometimes lengthy amount of time.

The contractor will be your partner in whatever building dream you are trying to realize so be sure you are comfortable on a personal level with him. Contractors have a professional interest in making sure you are happy, and this is made easier if they are good at relating technical and complicated information in an easy to understand manner. They're not trying to be your best friend, but they should have your best interests in mind. As in any human social interaction, someone who comes across as condescending, secretive, or disrespectful, is not someone with whom you want to get involved in a major building project.

Some questions to ask a prospective contractor are: What is your availability? What size jobs are you currently handling and how many? Is your work crew full-time? Will you be on-site once construction begins? What kind of contract and pay schedule do you like to work under? What licenses do you have? What's the permit application process like for a job like this, and what's been your experience in the past in applying for local licenses? Also, if you do go over plans and blueprints with a prospective contractor, ask for his opinion about the plans, and if he sees any potential problems.

Check out two or three references for each contractor, and be sure to ask for references from people whose project is similar to yours. Once in touch with the references, ask detailed questions about how professional the contractor was on the job, whether the work was done well in a timely manner, and if the person would recommend the contractor to a friend of theirs. Also, how close to the original budget the contractor came; was the site kept clean; were any liens placed on your property by unpaid sub-contractors; and if they would work with that contractor again.

A formal bid from two or three contractors does not need to be as detailed as the final contract, but it should give a good idea of the price, length, and quality of the work to be done. Price alone should not be your final criteria for hiring a contractor. Sometimes, an honest contractor who specifies a higher cost for a project, but who will actually come in close to that figure is better than someone who quotes a low price, but only completes half the job and comes back asking for more money later. Realize, though, that it's typical for overruns on any building project to be about 10% over the original price.

There are several ways that you can arrive at an estimate for the cost of a home building or remodeling. A general comparative approach is to find out what it cost for the completion of recent equivalent projects. Typically this is accurate to within +/- 25%. A slightly more accurate approach is to estimate by square footage. There is no standard price for the square footage of a house; it varies by locality and the amount of time and materials put into the building. Ask around and find out what houses in your neighborhood have recently cost to build by the square foot and also what they're selling for by the square foot. A good realtor or real estate lawyer should be able to help you with these estimates. However, even estimates by square footage are only accurate to within +/- 20%.

Another more reliable method of estimating a building job is "unit price estimating." This is the method most general contractors use to come up with bids for a project because it most accurately estimates the final cost. Pricing guides and published labor rates are used to estimate each stage in the building process. For example, the actual cost of materials for a roof would be multiplied by the square footage of the roof, plus the hourly labor cost, to come up with an accurate number. Each component in the building process (the sixteen divisions) is analyzed in this way to come up with the final cost estimate. Again, however, you should expect that final actual cost could be as much as 10% greater than the estimate.

So, you've gotten a prospective pool of contractors, you've done some homework on your own to determine a rough cost estimate of the job (and you may have even started talking to loan officers at your bank), and now you want to get bids from three to five contractors.

They'll need to know the size and scope of the work to be done, any plans you may already have, your schedule for completion, and a list of what you'd like to see included with their bid. You should not just receive a number back from a contractor. You'd like to see the base bid amount, but also a "schedule of values" that breaks that bid down into its components, i.e., how much for each of the sixteen divisions such as plumbling, electricity, and so on, and a schedule showing dates that meet your final completion date. Also, if the contractor can supply one, a list of proposed sub-contractors so you can feel comfortable with whomever the contractor will be hiring.

In selecting a contractor, you must decide between various experience levels. It might be better to go with someone with more experience, or with someone newer to the job, but who is looking to gain clients who would recommend them to other potential clients. Be wary, though, of contractors who have less than three years experience in the field. And watch out for "nuisance bids" by contractors who really don't have the time for your project, but put in an outrageously high bid just in case you might bite at the high estimate. Be careful you have at least three to five bids so that you can see the variation in price range.

Once you've selected a contractor, then the next step is to prepare and sign a contract. Like any formal legal agreement, the contract should protect the rights and concerns of both parties while clearly specifying the scope and limitations of the work to be done. A good source for contracts is at the website for the American Institute of Architects (www.aia.org) which contains free downloadable standard forms for contractors and owners.

There are several types of contracts and you should choose the one that fits you best. The "lump sum" contract gives the general contractor an agreed upon fixed amount over the life of the project. This has the advantage of locking in a given amount, but it might be high to begin with. This works well for simple remodeling projects. The typical contract is the "cost-plus" or "time-and-materials" contract where you pay the contractor the cost for labor and materials plus a percentage (anywhere from 10% to 25%) of that cost.

The contract should specify not only the start and end dates of construction, but also dates of completion of significant stages in the building process. This protects the owner in case work slips behind schedule. You can divide payments by month, but this doesn't insure that work stays current. It's better to link payments to the completion of milestones in the building: site preparation, excavation, pouring foundation, framing, roofing, exterior finish, masonry, insulation, electrical, plumbing, HVAC, windows and doors, interior trim and cabinetry, clean-up, and landscaping.

It's customary for the contractor to require a deposit before building begins. The deposit may only cover cost of materials that the contractor has to pre-order, but it is also reasonable to expect to pay anywhere from a quarter to a third of the total price of the job up front. Some states limit the percentage of the total cost of the house that a contractor can ask for as a deposit.

Warranties in contracts must specify exactly what is covered: time, materials, workmanship, and any limitations that apply to the materials or work. The contract should specify third-party dealers who offer warranties on their products, and you should receive those written warranties once the work is done.

The contract should also discuss methods of dispute resolution in case either party has a grievance. Typically, because both parties want problems solved, dispute clauses rarely need to be invoked. If, however, disagreement reaches an impasse, then the contract can serve as an aid in resolving the issue. Third-party arbitration is the usual recommendation for dispute resolution clauses-once standard legal means have been exhausted-and must be carefully worded to comply with state and federal laws and guidelines. It's wise also to specifically agree to a third-party arbitrator in the contract before any grievance arises. As with warranties, time limitations on dispute resolution should be specified, so make sure you are comfortable with the amount of time you are given to resolve disputed claims.

Although some contractors might present contractual terms as written in stone, anything and everything is negotiable. It's a mistake, however, to conduct these negotiations on your own. A good real estate lawyer familiar with building and remodeling contracts should review the terms and advocate for the best possible contract for you and your family. It is not an adversarial relationship you want with a general contractor, but you must be sure you cover every detail for which you might be held legally and financially responsible. If you are presented with a contract by the contractor, be sure your lawyer reviews it.

Other terms you should make sure are included in any home building contract are (1) right of rescission, where you have three days from the signing of the contract to void the contract, i.e., back out if you get cold feet for any reason; (2) mention of all applicable permits that must be bought and held by the contractor-including a use or zoning permit that specifies what kind of work is allowed on the property, building permit, electrical permit, septic permit, plumbing permit, and possibly even a grading permit; (3) a statement saying that the contractor must hold all licenses for performing the type of work specified in the contract, both local and state licenses; and (4) a statement that the contractor must carry adequate insurance for the duration and nature of the job. Some of the types of insurance the contractor are usually required to carry are workman's compensation, general liability, and even business automobile insurance to cover damage to worker's vehicles on your property. A certificate of insurance must come directly from the insurance company to you and not from the contractor. It is your responsibility to contact the contractor's insurer and have them send the certificate to you. Also, you should review your own insurance situation to make sure you are covered for any accidents that might occur on your property.

To protect yourself to a further extent, you might want to include in the contract a clause protecting you against liens on your property. If for some reason the general contractor fails to pay one of the sub-contractors, then that sub-contractor can legally place a lien on your property. The contract can state that lien waivers will be signed by each contractor, sub-contractor, and supplier, at each stage of completion and payment, so that you can see that everyone has been paid and that no lien might be placed against you in the future. The lien waivers are separate documents that would be the responsibility of the general contractor to have completed, signed, and returned to you.

Finally, the contract must specify how "change orders" are to be carried out. Change orders are any changes, additions, or deletions that occur during construction. As you can imagine, this is a fairly common occurrence in building and remodeling. The nature of building requires common-sense decisions to be made at every step of the process, but sometimes these changes must be discussed and added to the contract. A change order is how this is done and it must be specified in the original contract how these are to be agreed upon.

Once the job is done, it's customary for the owner to sign a "completion certificate" verifying that the job has been completed according to the agreed-upon plans, specifications, and cost, as originally stated in the contract. Before signing the completion certificate make sure (1) all work has been completed to your satisfaction and you have carefully inspected the work, (2) you have been given written proof that all sub-contractors have been paid, (3) the job site is clean, (4) you have been given all written warranties that cover workmanship and materials, and (5) that, if relevant, the contractor has given you a "certificate of occupancy" allowing you and your family to safely move into the home.

If for some reason you have a complaint that cannot be resolved by discussion, mediation, legal means, or third-party arbitration, you may still take your issue to a state or local consumer protection office, a local builder's association, or the Better Business Bureau. However, any good general contractor knows that for his business to be successful, he must maintain a solid list of satisfied customers. It's in his best interest to make sure that you are happy and would recommend him to others.

There are three areas you should watch out for to protect yourself from spending too much money or ending up with work that doesn't match your expectations. Contractors legitimately earn their money by (1) charging a fixed percentage of the total cost of the job, (2) marking up labor costs, including their own, and (3) marking up cost of materials. These, then, are the areas where unscrupulous general contractors can fill their pockets at your expense. Unless you fall for the pitch of a traveling siding salesman, most of the time you'll have to be aware more of small discrepancies than large scams.

Don't begrudge the general contractor for making a living, or make his workday a living hell by questioning every expense. Do, however, keep your eye on expenses as each payment date comes due. You have the right to know what you're spending on labor and materials, and the right to inspect those materials at any time. Also, if you're paying a percentage of the total cost, remember to keep an eye on that as costs run up, or change orders come about. The general contractor wants to hire workers and buy materials at the cheapest possible price, but he also knows that the workmanship must be good and the materials up to your specifications or he'll not get paid, or keep you as a client and referral.

To return to the image of the time-lapse video, that empty lot has been transformed into the home that you originally envisioned. You successfully found a general contractor, agreed upon terms and payment, spelled it out in a written contract that covered all of your concerns, established a working relationship based on communication and trust, took part in the decision-making process along the way, and watched the house of your dreams appear out of sawdust and cement. But whether you've hired a general contractor or done the contracting yourself, you have the satisfaction of realizing a dream, and a profound respect for the work and detail involved.