The contractor has done it again! Here's some advice from our perspective.
In the Contractor's defense...yes, we are out there to make money. BUT, if the contractor is serious about building his business and not wanting to spend a high percentage of his time selling himself to get a job, he WILL have the customer's best interest at heart. His jobs should be sold by his reputation. Very few people are happy when they get the bill. Usually, the sticker shock dissipates once the client moves back in and realizes that, "that widget is exactly where it should be and everything works. AND, their friends are impressed!" And with a little grim, they realize that they don't have horror stories to share at parties about what the they found after the contractor left or what they should have done. When you go to medical specialist, you go to the best one that you can afford. Wait. I'm in Canada, so the best one costs the same as the novice...nothing. My advice is to ask to see previous jobs done by the contractor and talk to the home owners about the good and the bad. And make sure the contractor has experience in the specific type of work you need done, or have experts who are. Talk to the building inspector about his experience with that contractor. They know who is good and who needs to be watched.
The market is full of wood butchers and scoundrels. I'm sure Toronto is no different from any other settlement, where anybody with a hammer and lack of other employment fancies them self a contractor.
If you are doing new construction it is much easier to establish a ballpark price than if you are building into an existing structure, especially if work has been done there before. Building booms are the worst time to have any work done because you often have to settle for an untried contractor without a pedigree. This is when the opportunists get work because you can't find any body else. The good guys are generally the ones still working when the market is slow.
I too work strictly on a T&M basis as the GC or project manager. But, "most" of my sub-trades will be on the job on a "fixed price" basis or a fee schedule. Prices will vary depending on actual site conditions. Fair is fair. How can a contractor be expected to cover the cost for repairs to structure compromised and hidden by previous contractors or "home handymen" (Do It to Your self-ers)! I've been in the business for 30 years and still I can't believe some of the things I find! Try, 5 joists in a row that don't make it to the other end because of multiple holes cut for pipes in the previous 2 or 3 bathroom renos!!!
Ask the GC or contractor how he selects the subs for your job. This is a trick question. If the Contractor has been around, he won't be putting jobs out to tender, he will have a group that he works with. Not necessarily trades in his employment, as this adds to overhead that you will be paying a premium for. Personally, I believe that an independent sub understands that his reputation is only as good as his last job and will want to build his business with the contractor. As a "sub" instead of an "employee" he knows that he is more easily replaced if he doesn't perform to the contractor's "expectations". Also, and very important, is that he must be a team player. Sometimes he has to take the second or third best/easiest route, for example running wire, when he knows that a pipe has to go in a specific area. He knows that he won't be on the next job if he complicates things for others. But it is the contractor that sets the tone (ie. if corner cutting is tolerated). Three-way communication is imperative. The subs need to know expectations and critical details before they proceed with work in each area, they need to tell the contractor immediately if they encounter a problem and possibly most importantly, the client should be comfortable discussing even the most minute detail that they are not completely happy with, with the contractor whether in the drawings or finished work. Never mind the hair dresser, only the contractor actually knows for sure! A fresh set of eyes and an open discussion usually comes up with solutions for what had been compromises. Experienced trades are always happy to get some of the lime light when they can propose a fix that they may have seen before or come up with in your specific situation. Never underestimate a trade that takes pride in his work!!! You will be pleasantly surprised. I take pride in finding them, keeping them and having them on site.
Conversely, ask the contractor how long his trades have been with him. Subs won't work for a contractor that is constantly having problem, doesn't treat them with the respect that a quality trade deserves and has issues with money.
Understand that the GC should be working for YOU, but he must also protect his sub trades. If changes are made, the trade must still get paid for the work done. If the change was made by the homeowner...
Ask how the contractor deals with change orders. I don't bill for changes, only for work done and restocking fees, if charged by the supplier, which is rare, since they want my business. Obviously my time is covered discussing the change, but I don't see the logic in charging for an item if it was changed before any work was done on it. I do custom work and therefore expect things to change as the job progresses. Very few homeowners have the insight or "mental imaging" capability to understand or "see" what is on the drawings. Sadly, this includes too many architects, engineers and designers. In their defense, (aren't I diplomatic?) they are not on the renovation site on a daily basis, if at all, after the project starts, and have made many assumptions in preparing their drawings. The contractor should be there and can address problems as they are exposed. He is often in the best position to propose solutions, present them to the homeowner and or designer given his knowledge of existing site conditions. This is what you are paying for.
As far as the fear of T&M becoming, "Take your time and material". The work site should be a happy place. As the homeowner, find things to compliment workers on. It will put a smile on their face and let them know that you are appreciating what they are doing. If they are not doing something right, take it up with the contractor to deal with. Discuss concerns and problems before they become big and expensive. "Expensive" translates into stress on everybody and causes voices to get raised and other bad stuff. If you have made a mistake, own up to it! We already know who's mistake it is. The difference will be how everybody eagerly contributes to fix it. For you! Honesty is a two way street. Work on a happy site will not slow down, because every body wants to work for someone that acknowledges and appreciates them. If work appears to be slowing, step back and make sure that there isn't some issue being dealt with or that your impatience to get your place back isn't clouding your perception. Having renovation/construction work done on your home is ranked as one of the most stressful events in your life. Right up there with having a baby, moving and not having money. Breath!