Your first meeting with a tenant improvement contractor sets the tone for your entire project—miss key details here and you'll pay for it later in change orders and delays. This conversation is your chance to vet their experience, understand their process, and confirm they can deliver what you're envisioning. Get it right, and you'll have a clear roadmap before the first nail is driven.
Clarify Your Project Scope and Budget
Start by walking through exactly what you need. Are you gutting a 5,000 sq ft retail space and rebuilding the layout, or are you doing a cosmetic refresh with new finishes? A full build-out with structural changes, HVAC upgrades, and code compliance runs $50–$150+ per square foot; lighter refreshes typically range from $30–$60 per sq ft. Be specific about what's included.
Ask the contractor how they handle scope creep. Most professionals will advise you to establish a fixed scope in writing before work begins—any deviation gets documented as a change order with added cost and timeline impact. This protects both parties.
Dig Into Timeline and Sequencing
Tenant improvement projects rarely follow a straight line. Ask the contractor how long similar-sized projects have taken them and what factors tend to cause delays. For a 3,000 sq ft office space with modest improvements, expect 4–8 weeks; a full build-out with custom features can easily stretch 12–16 weeks.
Request a preliminary construction schedule. This should show major phases: demolition, rough-ins (electrical, plumbing, HVAC), drywall, finishes, and final inspections. Ask which phases require city permits and inspections, since permit turnaround times can add weeks and aren't always in the contractor's control.
Verify Licensing, Insurance, and References
Never skip this. Confirm the contractor holds an active general contracting license in your state (requirements vary widely). Request proof of current general liability insurance ($1–2 million is standard) and workers' compensation coverage. Ask for at least three references from similar TI projects completed in the last 2–3 years, and actually call them.
During reference calls, ask specifically: Did the project finish on budget and on time? How responsive was the contractor to questions? Were there any surprises or disputes?
Understand the Payment Structure
Most TI contractors use a draw-based payment schedule tied to project milestones, rather than one lump sum. A typical structure looks like:
- 10–20% upon contract signing
- 30–40% at mid-project (rough-ins complete)
- 30–40% at substantial completion
- 5–10% final retention (held 30–60 days after project close)
Ask how invoicing works—monthly, by milestone, or by percentage of completion. Clarify what happens if a draw is disputed and how change orders are billed. Most contractors bill change orders at cost-plus 10–15%.
Discuss Existing Building Conditions and Permits
TI contractors live and die by what's already in the building. Asbestos, hidden water damage, outdated electrical panels, or failed HVAC systems can blow up a budget fast. Ask whether the contractor recommends a pre-construction site visit to identify potential issues and build contingencies into the estimate (typically 5–15% depending on building age).
Also clarify who handles permits. Some contractors include permit costs; others pass them to the owner. Tenant improvement projects almost always require permits for structural changes, mechanical work, and electrical upgrades. Budget $2,000–$8,000 depending on your local jurisdiction and scope.
Confirm Communication Expectations
How often will you hear updates? Will there be a dedicated project manager, or are you dealing directly with the contractor? What's the preferred method for submitting requests or raising concerns—email, text, in-person site visits, or a project management tool?
A professional contractor should offer weekly or bi-weekly check-ins for active projects and a clear escalation path if problems arise.
Frequently Asked Questions
Q: Should I get multiple bids for my tenant improvement project? Yes—aim for 2–3 detailed bids from licensed contractors so you can compare scope, pricing, timeline, and proposed approaches. Watch out for bids that are significantly lower than others; they may underestimate costs and lead to budget overruns.
Q: What's the difference between a contractor's estimate and a guaranteed maximum price (GMP)? An estimate is an educated guess based on known scope; a GMP is a binding commitment not to exceed a specific price unless the owner requests changes. GMP contracts cost more upfront but reduce financial risk for the owner.
Q: Do I need to occupy the space during construction? It depends on your lease and the project scope—full gut renovations typically require the space to be vacant, while lighter work may allow phased occupancy. Discuss this early with your contractor and landlord to avoid costly schedule conflicts.
Visit Mercoly to compare vetted tenant improvement contractors in your area and review past projects before you commit.