ETI Blog

A few years ago, a construction survey revealed a $177 billion industry problem. The cost of rework and conflict resolution was causing a massive financial burden across the sector. Rework alone is estimated to average around 12% of total project costs and often extends timelines, which pushes revenue further down the line. 

Many of the underlying causes of rework can be traced back to inefficiencies stemming from poor communication, design discrepancies, and unskilled labor. Choosing the right multifamily general contractor for your construction project can help you avoid these pain points and safeguard your investment against becoming part of this multi-billion dollar issue. 

In this article, we’ll share tips on how to vet multifamily contractors during the proposal process so you can partner with an experienced team that adds value to your project.

Licensing and Insurance Red Flags

One of the very first steps in vetting a multifamily contractor is to verify that they hold the appropriate license(s), insurance coverage, and bonding for the type of work your project requires.

Insurance Coverage

Request a current certificate of insurance and confirm that the contractor carries adequate general liability and workers’ compensation coverage for the type of work they’ll perform. Some multifamily contractors only carry minimal policies or ones that exclude high-risk or specialized work, which could leave you exposed. If your project is large or complex, ask who would be responsible for the Builder’s Risk Insurance and whether you’re eligible to be listed as an additional insured if you hire them.

License Verification

For licensure, multifamily contractors in Chicago must hold specific licenses for different types of work. A contractor could claim full-service capabilities but lack proper licensing for specialized trades like electrical, plumbing, or structural. Visit the City of Chicago Licensed Trade Contractors page where you can find more information on currently licensed contractors or contractors with recently expired or inactivate licenses. 

Ask whether the contractor works with employees or trade partners and confirm that all workers will be covered under a valid workers’ compensation policy. Misclassifying employees to avoid this coverage is a red flag, one that could create a liability risk for you if someone is injured on the job.

Quality and Performance Benchmarks

Beyond checking boxes on licensing and insurance, be sure to evaluate how a contractor runs their projects on the ground. These details will reveal more than a proposal ever will.

Material Sourcing

Experienced multifamily contractors tend to have long-standing, established relationships with reputable suppliers. Ask how long they’ve worked with them and how those relationships help the project stay on schedule. Frequent changes in suppliers could signal credit problems or cutting corners on materials. 

Construction Crew

Inquire how long their crew has been with them. A consistent team is a sign of strong management, but high turnover or reliance on day laborers could lead to inconsistent work quality and project delays.

Relevant Project Experience

Multifamily construction requires both technical skill and logistical expertise, so hiring a contractor with direct experience in multifamily project management will make a big difference. Ask to see photos of their work, and request a reference if you’re interested in learning more. 

Payment Practices

A contractor’s financial practices can shed light on how well they manage projects—and how much risk you may be taking on. Before moving forward, ask how they structure payments and retainage.

Upfront Deposits

A reasonable initial deposit is typically around 10% to cover early-stage costs, such as permitting, insurance, site setup, equipment mobilization, and administrative costs. If a multifamily contractor asks for more than 30% upfront, it’s a good idea to request an itemized breakdown to clarify what the larger deposit covers.

Progress Payments and Retainage

Most multifamily construction projects follow a monthly billing cycle based on completed work. Standard retainage between 5%-10% is withheld from each payment until the project is finished, protecting the owner’s investment until the end of the project.

In some cases, payments are made through a title company, which acts a neutral third party to hold and disburse the funds. Contractors who are open to working with title companies understand that proper documentation, like lien waivers and inspections, must be submitted before funds are released, which promotes accountability and keeps financing on track. It’s a win-win for both parties and helps reinforce financial transparency from the start.

Communication Standards

Effective communication is the foundation of every successful project. It keeps timelines moving, decisions aligned, and issues contained before they spiral into costly delays. Poor communication is one of the most common causes of rework, yet it’s one of the easiest to avoid with the right systems and practices in place.

As you evaluate contractors, ask how they manage day-to-day coordination. Do they hold regular check-ins? Who will serve as your main point of contact? Do they use a centralized system to track progress, manage documents, and keep all stakeholders informed?

Multifamily contractors who invest in project management software often have a clearer process for keeping everyone in-the-know. For example, ETI’s client portal acts as a central hub for all project communication, giving property managers, architects, contractors, and field teams real-time access to schedules, change orders, and documentation. When everyone’s on the same page, collaboration is more efficient, and your timeline and budget are better protected. 

Next Steps

Choosing the right contractor for your multifamily renovation project or new build requires due diligence and a clear understanding of how each candidate operates beyond the proposal. Taking the time to vet them on the front end of the project can save you time later by avoiding rework, delays, and conflicts.

With a “measure twice, cut once” approach to multifamily construction, we know what it takes to deliver on our promise, anticipate issues before they become problems, and serve as a dependable partner in your investment. 

Avoid the costly setbacks that come from choosing the wrong partner. Contact ETI Construction to start your multifamily project with confidence.