We built an inlaw addition and thankfully had an excellent experience. We got several estimates (all pretty high, and higher than what the architect estimated). I then had a workman come out as a subcontractor for my local floor store when I was putting a new floor in my own home. He did such a nice job - cleaned up his mess impeccibly and was very polite - that I asked him for his # for future reference (small projects I thought). Turned out he did a lot of buildings and additions but in the slow "offseason" (this was in the 90's, I don't think there is an offseason anymore) he did small jobs. So I got an estimate from him for our addition and his price was better than all the others (and more in line with the architect's estimate). I was a little nervous (because of the price and the fact he hadn't been recommended to me) so I went to several homes he'd either renovated or built onto (he lives in my town). The people he'd worked for couldn't say enough good things about him so we went ahead and he did a wonderful job for us, too. Turns out the reason his price was low was that he only had one other workman with him (I made sure he would be using the same high quality building materials called for in the plans so "cheap materials" didn't factor into the price). I think this caused the project to take longer than it otherwise would have, but both of them were perfectionists and it didn't really impact our lives in a major way so we didn't mind.
My research yielded the following tips:
1) Make sure the contractor has insurance but also any subcontracors, too - ask to see all policies or call their companies to verify their policies.
2) Call your own insurance company and make sure your own policy reflects the value your new addition will have on your home even before you start work so you don't forget.
3) I believe in the value an architect provides if your project is at all complex. Ours was as we had to get a permit for the apartment and all requirements had to be met from the town. We were within inches in some spots but thanks to our architect there were no problems. It also helps, as in our case, to know if you're getting a fair price.
4) Customary, I think, is to pay in three installments: 1/3 for deposit; 1/3 halfway through; 1/3 when completed to your satisfaction.
Find a good website on how to hire a contractor and do your research beforehand. One of the estimates we got was from a "friend" but we chose not to use him and am glad we did not. One, his price was too high but also if there had been a problem it might have cost us the friendship.
Good luck with your project.