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How to Avoid Construction Scams and Overcharging: A Client’s Guide
In my 35 years working in the building and construction industry, one issue has become increasingly rampant: overcharging, overbilling, and unethical practices by many, not all, service providers. These behaviours not only drive up the cost of construction but also contribute to the growing unaffordability of homes.
I’ve witnessed countless construction scams over the years, and I’ve made it my mission to try and avoid them – and also my clients. My approach is meticulous, with a touch of OCD – I insist on clear agreements, monitor hours worked, and question inefficiencies. It sounds like a lot of effort, doesn’t it? But wouldn’t it be better if we could trust contractors to do their jobs honestly and efficiently, without taking advantage of us?
Unfortunately, that trust is often misplaced. In my experience, 2 out of every 3 invoices I receive contain discrepancies, requiring significant time and effort to resolve. What’s worse, when I, or a member of our team raise these issues with contractors, many go on the defensive, escalating the situation unnecessarily.
The Cost of Overcharging
Just this week, I dealt with a earthworks company in Auckland that sent us an inflated bill. I emailed the contractor back with the corrected hours, but instead of apologising, he called to say he accepted the amendment but no longer wanted to work with us.
Was I wrong to challenge the inflated bill? Or was he embarrassed that we caught him out? Either way we both lose – his operators work was good, but unfortunately his professionalism didn’t match.
Sadly, this isn’t an isolated case. I’ve dealt with plumbers and electricians billing for more materials than were used. I’ve seen carpenters deliberately use inefficient methods to extend their hours. These practices are frustrating, unethical, and costly for clients.
A particularly egregious example I heard recently involved a solar hot water company that won a government contract to heat outdoor swimming pools for many schools in the area. Instead of placing the hot water solar panels in optimal locations for efficiency, they installed them in less effective positions. Why? To justify supplying more hardware and boosting their income. This kind of unfortunate behaviour not only wastes money but also undermines the trust we place in contractors and suppliers to deliver quality solutions.
And we can’t ignore the broader issue of poor building quality. That actually disappoints me more. Cutting corners often leads to substandard results, which can cost clients dearly in the long run. Repairs, replacements, and ongoing maintenance add up, turning what should have been a straightforward project into a financial and emotional burden.
What’s even more concerning is the ripple effect of these unethical practices. As someone who frequently receives calls from people asking for contractor recommendations, I find myself unable to refer companies that I know engage in scams or dishonest behaviour. This doesn’t just damage the reputation of individual contractors – it erodes trust in the entire industry.
Why Self-Building Projects Are Discouraged
I’ve been trying to encourage more self-building projects for decades now. I firmly believe that designing and building your own home can be one of the most rewarding experiences in life. Not only can it save money, but it also allows you to create a space uniquely tailored to your needs – and your family will thank you for it.
Unfortunately, the reported prevalence of construction scams has made many hesitant to pursue this path. I have wealthy friends and clients who prefer to buy pre-built homes rather than risk the stress, hassle, and conflict associated with building from scratch.
And honestly, I understand where they’re coming from. Even on my own projects, the prospect of dealing with inflated costs and disputes is daunting. It’s a shame that an industry with so much potential and creativity is so often tarnished by these unethical behaviours.
How to Avoid Construction Scams
The building and construction industry has long been plagued by unethical practices, from overcharging to outright corruption. I’ve seen threats, bribery, and even violence on job sites.
While these behaviours won’t disappear overnight, there are steps clients can take to protect themselves from scams and ensure their projects are completed fairly and professionally.
Here are my top tips to help you avoid most construction scams:
- Get a Written Quote.
Always request a detailed written quote before agreeing a job. The quote should clearly outline what’s included and excluded, as well as the agreed-upon rates. Be explicit about whether non-productive tasks are included like servicing contractors’ machinery and break times. - Record Everything.
Keep meticulous records of time worked on-site. Have contractors log their hours and cross-check them with your own documentation. Give them a heads-up that you always log hours and is that going to be a problem? It breaks the ice and sets you both off on the right foot. - Monitor Efficiency.
Don’t be afraid to question activities that seem inefficient or unnecessary – if your contractor is working on a time and materials basis. Remember, inefficiency in our industry is our biggest financial overhead. - Don’t Hesitate to Fire Contractors.
If a contractor doesn’t meet your standards or behaves unprofessionally, don’t be afraid to terminate the contract. It’s not pleasant, but it’s better than getting a bad job that you pay for. - Document the Job.
Take photos and videos of the work at various stages. These can serve as evidence in case of disputes later. They also serve as a good reminder of what was done when you go to modify a part of your building. - Avoid Paying Upfront.
I try not to pay for services that haven’t been completed. A very small deposit is fine in certain circumstances where products have to be ordered from 3rd parties, but the bulk of the payment should be made after the work is done to your satisfaction. - Get Multiple Quotes.
I recommend always getting multiple quotes – normally at least 3, and make sure those quoting are licensed for the job in hand. This can save a lot of money.
For example, on a recent timber floor sanding and sealing job that I organised for a friend, she saved 50% ($7k) from her own supplied quote before we lent a hand. The supplier she chose wasn’t the cheapest either and they did an excellent job.
Remember: Higher cost doesn’t always mean higher quality services. Shop around and go with your gut – not online testimonials. - Limit Interruptions.
While it’s important to communicate with contractors, avoid unnecessary small talk. Most usually charge you for time spent chatting, and familiarity can sometimes show your inexperience and can work against you. - Reward Good Work.
If you find a reliable contractor who does excellent work and charges fairly, stick with them – and recommend them to others! Reliable service providers deserve recognition, and they will remember you for your referrals. - Be Willing to Fight Your Corner.
If you’ve documented everything correctly and feel you’ve been wronged, and can’t resolve the situation amicably, don’t hesitate to take legal action.
In New Zealand, the small claims court is a relatively straightforward and effective option. - Get Insurance
You can find building insurance that protects you during the construction phase. Some are good, and some not so!
Be aware of the insurance policies that only cover jobs that are entirely billed by one main contractor because it’s rare that all jobs get invoiced this way. For example, if one 3rd party is involved in a job as menial as building a small deck, this could void any bigger claims on the house.
How to Avoid Construction Scams and Overcharging – Final Thoughts
It seems construction scams and overcharging is here to stay, but by being proactive, vigilant, and informed, clients can protect themselves from unethical practices.
Learning how to avoid construction scams is essential for anyone embarking on a building project, whether you’re renovating, hiring tradespeople, or considering a self-build.
If you’ve found a trustworthy and professional supplier, don’t keep them a secret – share their details with others who might benefit. Good referrals are worth their weight in gold.
And if you’re a service provider reading this, consider the long-term value of integrity. A reputation for honesty and professionalism will always pay off in the end.
Related
An Affordable Home Self-Build Guide
What Has Grand Designs Taught Us?
The Housing Crisis Is a Leadership Crisis: Rethinking Affordability and Sustainability
