Today topic is Remodeling.

My guest today is Jean Gibson, Vice President of Gibson Home Builders, Inc.
Things To Consider When Choosing a Remodeling Contractor

Most sources agree that the home repair and remodeling businesses tend to be small and typically—though not always—not professionally well managed. There are a few exceptions, particularly in the relatively rare large firms in specialties such as kitchen, bath renovations and HVAC. These may be national, regional, or local in scale, but are large enough to involve full-time management staffs and expertise. The results of this widespread shortfall in management expertise and attention include a high incidence of inadequate quality of workmanship, financial capability, planning for growth or diversification, limited in-house technical training or quality assurance. These problems are often the most serious barriers to learning and using methods that can save energy even in small ways, let alone comprehensive approaches to the house as a system.

Business goals and objectives

"Best practice" or high priority business goals for residential contractors include some of the following ideas: get the job, make money, train staff, find new staff as needed, do great work and use it for marketing, provide customer care and use for marketing, keep learning, and take time to learn and do it right. But for the most part, contractors—remodelers as well as specialists—find it necessary to compete primarily on price, resulting in low margins, staff instability, cash flow problems, and pressures to cut corners, eliminate training time, and focus on management of the customer’s expectations rather than do true quality work. The low-bid market scarcely allows them to do otherwise.

Despite this general situation, there are many contractors who emphasize quality, targeting customers who appreciate and will pay for it. But too often their vision is limited by the available education and training support. Few contractors of any type understand building science, how buildings actually move air, moisture, and energy or how badly most homes perform. They have no good way to learn how to incorporate energy efficiency (as well as comfort, safety, health, etc.) into their work or to change their business to emphasize those benefits.

Company management structure and organization

The residential contracting industry is extremely localized and splintered, despite recent publicity on some efforts to consolidate firms. The vast majority of remodeling and repair firms are small. In such firms the owner or manager began as a technician with no business training. Such owners typically have to be directly involved in all aspects of the business, from marketing, sales, staffing and field supervision to purchasing, accounting, legal matters, payments and collections. Cash flow and profitability concerns limit the owner’s options. The result is often a static or unplanned business that innovates only when forced by regulation or market demand.

If and as smaller firms continue to consolidate or are replaced by larger and more business-oriented companies, a greater emphasis on more strategic and innovative business models may emerge. But at present the financial and managerial constraints and price-competitive pressures on many contracting firms tend to be major barriers to the kinds of improved business and technical practices that are needed to create major energy savings in remodeling and home repair.

Licensing, certification, and codes

In many states, no contracting license is required; in some cases none is offered, or focuses entirely on credit history or other non-technical factors. Even where licensing is required, there is no emphasis on energy-related capabilities in the training or testing used. Certifications of various kinds are widely used by contractors, particularly in specialty areas such as HVAC. More public education is needed on the identification and value of effective certification as confirmed by Theresa Ford-Crahan of the NAHB Remodelor’s Council “the demand is not there yet for green or energy efficient remodeling. That’s one of the reasons they have not offered a stand alone green or energy efficient remodeling credential”.

Building codes and regulations generally do not deal with energy efficiency. Nationally, an upgraded 13 SEER minimum air conditioner efficiency standard is in effect as of January 23, 2006. However, this is unaccompanied by any requirement regarding installation performance, so much of the potential energy savings that customers expect will not be attained. California’s Title 20 and 24 energy efficiency codes are a major exception and model for the rest of the country despite the limitations of their compromise-based adoption process. Through Title 24’s October 2005 update, California now requires targeted levels of duct sealing when installing/repairing AC systems in certain climate zones; further improvements contemplated for the 2008 update include airflow and refrigerant charge confirmation as well as proper equipment sizing. For energy efficiency to be a standard factor in every contractor’s work, mandates such as California’s may be required to overcome the many barriers to change.

Professional networking and industry group affiliation
Contractors routinely network to find reliable subcontractors and colleagues to provide new work and flexibility in managing workload variations. Some join trade or professional groups such as NAHB or ACCA, although these are small minorities. Many others subscribe to journals and information services to help keep abreast of new tools and techniques. A small but growing number join mutual-support groups whom meet and share critiques and ideas for improving their success. However, energy efficiency has not been a significant aspect in virtually any of these activities apart from the efforts of whole-house contracting support groups such as ACI (formerly Affordable Comfort, Inc.) through conferences and training seminars for a very small part of the contractor population.

Typical customer attitudes toward contractors
Customer attitudes toward contractors vary widely, but our interviewees tended to perceive a dominant skepticism regarding contractor competence, reliability, and even honesty. Contractors must exert themselves to overcome this customer bias, and they do so through various combinations of strenuous marketing for name recognition, emphasizing customer management, and cultivating customer satisfaction and referrals. Contractors who can distinguish themselves effectively from their competitors have the best opportunities for avoiding the low-bid “race to the bottom” and introducing new services successfully.

Marketing strategies and techniques
ACCA (Air Conditioning Contractors of America) estimates that more then 2/3 of all HVAC contractors promote and market services based solely on price—with little emphasis placed on quality installations, expanded value, and service. This results in smaller jobs and more lost opportunities for energy savings and other benefits. Web-based contractor locator services are also becoming more widely used by both consumers and contractors; with companies like www.servicemagic.com (more than 30,000 contractors listed) leading the way. The North American Technician Excellence (NATE) association confirmed that follow-up service contracts are widely used among successful contractor companies, and help to eliminate the peaks and valleys of traditionally seasonal business models—but these business practices focus on small performance improvements and low-cost service, still missing major opportunities for energy savings.

Recent research on buyers of comprehensive energy retrofits by IBTS (Institute for Building Technology and Safety) team members suggests that most of the motivation for such energy efficiency projects is attributable to non-energy benefits, notably family health, safety, comfort, home value, pride of ownership and environmental values. This was best captured in a discussion with George Sullivan of Eco-Smart Building in the Chicago area: “Customers don’t know what questions to ask, realtors can’t sell anything other than granite counter tops and stainless steel appliances, and remodeling and building trade contractors in the Chicago area don’t know much, if anything, about energy efficient practices. Lack of education for realtors and trade contractors about energy efficiency is a huge issue.” So far there is no evidence than any conventional contractors take such benefits into account in their marketing of home improvements—resulting in more limited job scopes and further lost opportunities for increased energy savings in each home

Customers lead handling and sales process

All contractors get customer inquiries (leads) through marketing or referrals. The survey and team experience indicate that most contractors do not have an organized process for receiving, recording, qualifying, and responding effectively to them. This appears to be particularly true for small local contractors, especially in specialties such as HVAC repair/replacement. Leads are opportunities for selecting qualified customers, providing education, and selling energy-saving solutions such as whole-system HVAC upgrades (instead of only equipment replacements) or complete building thermal load reduction (rather than only window replacement). Easier access to lead forms designed to include energy-related information and simple instructions on their value and proper use could significantly improve

Use of diagnostic testing and inspection
In whole-house energy retrofitting, as practiced in programs such as Home Performance with Energy Star, comprehensive diagnostic testing and inspection of the home is a key component. This involves a variety of tests on the building envelope as well as the HVAC system and combustion appliances plus direct inspection for problems such as moisture retention and mold, improper combustion appliance location or venting, and inadequate insulation. In contrast, common contractor practice is to respond to a homeowner’s perceived problem and focus only on a quick remedy without a broader perspective on the house as a system.

ACCA estimates that no more than 5% of all national HVAC contractors are using a “whole system” approach to their jobs. True comprehensive “whole house” approaches are even more rare.
Anecdotal information suggests that unless part of either a utility-sponsored program or mandated by a state or regional code, HVAC contractors are not currently using a comprehensive systems approach. NATE confirms that view.

The National Association of the Remodeling Industry (NARI) says that comprehensive home diagnostics and repair is simply not happening in the industry, unless mandated by some sort of program sponsor as a requirement. It is estimated that less than one percent of all remodeling contractors use this approach.

Licensing requirements provide no help. ACCA estimates that less than half the states have any type of recognized licensing requirement, and of those, very few require any sort of contractor testing or training. NATE agrees, and confirms that around 30 states have licensing requirements to be an HVAC contractor, but that most are just business licenses without any sort of technical requirement. None requires or even encourages home performance testing and diagnosis.

Incorporation of customer incentives and financing
The Electric and Gas Industries Association (EGIA), for example, noted that all home repair and remodeling trades incorporate utility, manufacturer, or third-party sponsored financing. Those conventional sources tend to have many limitations in loan amounts and items covered. Except for some of the utility incentive programs, most tend to be focused on specific equipment or tasks such as insulation, with little emphasis on proper installation or full-system scope. Re-packaged/easy to use loan processing (for both homeowners and contractors) makes a tremendous impact on job scope and closure rate. The training of contractors in how to use financing is just as important as providing it, and the lack of that training is probably the major reason why even the most promising financing opportunities for energy-saving improvements are not more widely or properly used. An easy early step might be to make contractors more aware of available customer financing options for their use, reassure them of ease of learning and use, and provide online training and access. Other possibilities include expanded utility marketing of energy efficiency incentive programs through contractors and guidance to contractors on their effective use.

Involvement in national and regional programs

There are almost no national programs supporting contractors in existing-home energy retrofits or inclusion of energy-saving features in other home improvements. The primary exception is the EPA Home Performance with Energy Star program (see Chapter 3), which encourages the local development of support for training and encouraging both HVAC and remodeling contractors in whole-house energy retrofits. At present this model requires all participating contractors to go far beyond individual energy-saving improvements, emphasizing comprehensive whole house retrofits.

Regional energy-related programs involving many contractors tend to be dominated by utility energy-saving incentives. Widespread but far from universal among energy utilities, these programs encourage contractors to market their cash or financing incentives to homeowners for specific improvements such as high-efficiency air conditioners, furnaces, windows, and insulation. The major problem with such programs is that they tend to miss important energy-saving opportunities and often also suffer in quality of installation due to misdirected incentives and lack of contractor training.

Very few utilities or energy-related agencies offer special incentives for more integrated energy efficiency retrofits. The primary exception is the New York State Energy Research and Development Commission (NYSERDA), which sponsors a statewide home performance retrofit program with a mix of mass marketing, low-interest financing, contractor qualification, and direct incentives to contractors for whole-house energy efficiency testing and assessment.

Installation quality by most contractors (particularly HVAC) is widely felt to be seriously inadequate. HVAC equipment is oversized. Newly installed or sealed ducts often leak excessively. Return ducts are almost always too small. Refrigerant charge and airflow are not accurately established. And too often in general construction, insulation is badly installed, air infiltration is excessive and uncontrolled, window flashing is poorly done and leads to rot, and no attention is paid to combustion safety testing.

Incorporation of diagnostic tools

Home energy performance diagnostic tools are seldom used. In addition to the use of diagnostic tools in an initial home assessment, those same tools should be used during installation and remediation work to assure proper energy-efficient results at a point when corrections can be made easily. This is virtually never done in common practice. Even contractors who pride themselves on quality work are often shown to be unknowingly failing to meet best-practice standards in key energy savings steps such as duct sealing, insulation, and envelope air sealing—all of which can readily be confirmed with standard testing equipment such as duct blasters, blower doors, and IR cameras. Few contractors even own such tools or know how to use them, although both the tools and training in their use are readily available.

Job site management practices

Remodeling and repair contractors’ difficulties with scheduling, cleanup, and quality assurance are widely acknowledged. These projects are often done with the occupants living at the job site. This places special importance on job site management practices, reliable scheduling commitments, constant cleanup, and consideration for occupant needs. In energy-related projects, close coordination and cooperation among trades is crucial to ensuring that the desired performance improvements are actually achieved. For instance, specifications must require plumbers and electricians to minimize and seal all structural penetrations for pipes and wires to reduce uncontrolled air movements within the framing.

Structural framing practices

Common framing practices offer many opportunities for improvement in energy use. There are opportunities for improved insulating value in exterior walls built in innovative ways using more efficient framing or structural insulating panels. These are well established in standards and proven practice, but not always accepted in local codes or understood by most contractors. These innovations contribute directly to energy savings.

The most common deficiencies in modern interior framing during remodeling involve the use of architectural features such as cathedral ceilings, plywood-framed arches open above, double-framed walls for plumbing (with open chase-ways to the attic or joist space), and features such as knee walls and complex roof configurations that are inaccessible or otherwise inadequately insulated. Unsealed framing penetrations for various pipes and wires also cause undesirable air movements. All can be corrected readily through a basic knowledge of air intrusion and air sealing.

Installation of shell sealing, windows, and insulation

Interviewees and team members agree that shell sealing is typically ignored in most contractor projects, although some homeowners attempt basic improvements in keeping with recommendations by utilities and energy efficiency advocates. The principal deficiency in shell sealing is that some of the most important sources of uncontrolled air and thermal intrusion are not included in such recommendations. Contractors could be readily educated in treating this topic comprehensively.

Local and national codes

Most local as well as national building codes tend to provide little if any guidance on quality assurance. The new California Title 24 requirement for duct sealing and verification through duct pressurization testing is only a first step in assuring that energy-related home improvements actually perform as planned and expected. Even in new homes, testing often demonstrates poor performance in virtually all energy-related matters from HVAC system efficiency to building envelope management of air, moisture, and heat movement.

Field staff quality assurance education and motivation

Contractors and their field crews are generally uninformed on the value of testing to confirm quality and reduce callbacks or legal conflicts arising from even inadvertent mistakes. Contractors must be taught the importance of testing and how to assure adequately trained and motivated field staff in both proper installation and confirmation through performance tests.

Conducting and documenting test-outs, including combustion safety

The concept of completion quality testing is almost unknown. Combustion safety testing has been covered in an earlier chapter, but is a vital aspect of job quality assurance. Other appropriate tests, depending on the scope of the project, may include infrared inspection of new insulation, a blower
door test to verify building air management and appropriate ventilation when air sealing has been done, and duct blaster/flow-hood tests to assure that a revised HVAC system is performing efficiently and providing proper airflow and comfort to all rooms. None of these tests is done routinely, if ever, by most remodeling and HVAC contractors. This deficiency in common practice is an invitation to legal liability risks as well as customer dissatisfaction and even danger.

Providing homeowner with maintenance and operations instructions

Common practices vary widely in assuring knowledgeable job “handoff” to the customer. At the end of any remodeling or repair project, the contractor should provide the homeowner with all manuals, operating instructions, and warranty information for any equipment and materials used. In some states this is legally required. It is particularly important in energy-related improvements, where homeowner understanding of requirements is crucial in routine responsibilities such as air filter replacements, proper thermostat operation, and efficient use of lighting, pool pump timers, and similar features. Interviewees and team experience suggest that this is done effectively by some contractors but is too often incomplete or overlooked by both contractor and homeowner.

Scheduling maintenance and follow up, including bill tracking

Opportunities for assuring continued quality and satisfaction are generally overlooked. Best practice for all remodeling and repair contractors is to re-contact the homeowner several months after job completion to check on the home’s performance after energy improvements and assure proper operation and maintenance. It is advisable to review utility bills at that stage as evidence of performance improvement. Interviews indicate that these useful steps are not taken in most cases.