You will be in a working relationship with your builder for the duration of your project. Its important to choose well. Rather than focusing on a single aspect of the project; whether design, cost, or schedule availability, you might want to consider selecting a builder based on competence, character, references, professionalism, warranty coverage, and experience. 

Ten time tested strategies on how to avoid failure.

1. Builder's Character...
        Choosing a Builder is a highly personal and emotional experience. You'll want to choose a builder with whom you'll feel comfortable. A Builder with maximum knowledge and minimum BS.
2. Legal & Criminal History...
        Check the Builders legal history as well as any past criminal record, which is a lot more common than you may think. Remember you are entrusting your home to the builder you choose for the duration of the project.
3. Insurance...
        You only think about insurance when something goes wrong. Be proactive and make sure that your Builder has at least 3 Million dollars comprehensive insurance coverage as well as Workers Compensation.
4. Reputation...
        The way a Builder treated his previous customers will give you insight to how he will treat you. A good reputation is earned over many years.
5. Warranty...
        The builder should be willing and able to offer you a comprehensive 2 year written warranty on your new project. Even better, if the builder would offer an optional extended warranty beyond 5 years.
6. Financial strength & stability...
         Make sure the Builder you select is financially viable. Success in the building industry is earned by building a quality product at a fair price. A builder who is financially successful likely will still be in business during the warranty period for your project. Further, successful builders are in the best position to contract for the services of top subcontractors and suppliers – the people who will actually build your project. In this case bigger really is better.
7. Price vs. Value...
         The most important consideration is the quality of the builder's work. Cost is not a direct measure of quality. Rather, good quality is the merging of good design with appropriate products and materials that are installed with superior workmanship. The "cheapest price" is never what it seems. In this business you truly get what you pay for.
8. Permits - Deal with City...
        Does the Builder have a good relationship with the City? Make sure permits are applied for and remember the advantage of an in-house design service to ensure that your dreams are transferred to paper without losing something through an extra layer.
9. Detailed Paperwork & Proposal...
        Proper paperwork can make or break your project. Communication is key to a successful project and a good indication of this is the Builder's proposal and other communication. Detailed and accurate contracts, transmittals, change orders, drawings are critical and necessary.
10. Years in Business...
         The number of years the Builder has been in business is a good indication of the number of years he will stay in business. Most businesses (over 90%) fail with-in the first three years, so a 5 year warranty would be of little value. Many Builder's work from their truck or garage and have no business address other than a PO box. A professional Builder will provide you with professional results.