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Project Management Guide

Our project management guide covers the pros and cons of using a main contractor, being your own project manager and using a package company. Also includes advice on cash-flow and tips for successful project management.

It’s one of the great anomalies of the self build world that, for the overwhelming majority of individuals building their own home, the actual level of physical involvement on site – literally building it yourself – is next to non-existent. ‘Self building’, in fact, encompasses a whole range of different approaches, but as long as you’re finding your own building plot, deciding on an individual house design to suit your own unique needs, and choosing the products to go into that home, you can proudly wear a badge that says ‘self builder’ on it. Choosing how to get to that goal, however, involves carefully evaluating your own circumstances and deciding what you can bring to the party. This article is designed to help you understand what the key routes involve, and which one might best suit you.

Use A Main Contractor

HOW IT WORKS: The self builder employs a main contractor to run the building site on a day-to-day basis. This will usually involve the main contractor being responsible for organising a smooth flow of labour onto the site when necessary (and paying them directly), dealing with the unloading of deliveries, organising warranty and Building Regulations inspections, running the site itself (e.g. toilet facilities and so on), and working from the design plans. In addition, depending on your arrangement, the main contractor might also be responsible for ordering materials and ensuring they are on site when necessary.

YOUR INPUT: You will of course be responsible for hiring the main contractor in the first instance — so choose well. In addition, you’ll need to ensure that the main contractor has detailed building drawings to work from and, crucially, a detailed specification of materials – whether he is ordering them himself or not – as early in the process as possible. You should be prepared to visit the site at least once a week to check on progress, and to ensure that the drawings are being followed, and that the main contractor has everything he needs. It’s also important psychologically for the main contractor to see that his work is being appreciated and encouraged. You will still need to be able to maintain telephone contact at any time for emergencies or questions as they arise — communication is critical to the success of this route.

Cost and Cash-flow Implications: Although the main contractor will be responsible for paying the subcontractors, you will need to ensure a regular payment to the main contractor. Many main contractors will give a fixed price quote at the tendering stage and will present you with a monthly invoice (showing the balance still owing along with any ‘extras’) that you should be prepared to pay promptly. If you are leaving materials purchasing up to your main contractor, be aware that while a great deal have trade accounts (and, therefore, long credit terms) with many key suppliers, you might be required to pay upfront for some items. If this is the case, ensure that you get them ordered in your name.

A main contractor will rely on a percentage uplift or ‘add-on’ to the quotes he gets from his subcontractors in order to pay him for his own time. This varies according to the market, but is likely to be around 20-40% on top of labour and materials prices. It’s highly likely that if you go down this route you’ll never know — and probably never want to know! However, many self builders who go down this route view the main contractor’s margin as money well spent to avoid the stresses and strains of running a building site day to day.

PROS

  • A good contractor will have experience and insight into the build and pre-empt many issues before they arise.
  • They’re experienced in programming and procurement scheduling.
  • They are responsible for safety on site.
  • They’ll carry insurances for the works.
  • Payments and cash flow of the trades are the contractor’s responsibility.
  • The contractor’s credit lines ensure efficient cash flow.
  • The range of contacts and sources of materials is extensive and generally very reliable.
  • The use of a fixed-price contract gives an element of cost certainty, which helps both your planning, and the lender’s level of comfort — remember, a bank lending on property prefers certainty over most other virtues!
  • Logistics and day-to-day running should be efficient and timely, and the site left clean and safe each day as part of the contractor’s modus operandi.
  • You make one payment each agreed period (usually monthly) to the contractor, which cuts down the complexity considerably.

CONS

  • Added cost: the contractor will have built in a level of profit into your contract price.
  • The scheduling and programming is out of your control.
  • The additional level of communication between you and the trades on site is held by the main contractor, which can give rise to cost increases to cover the contractor’s overheads and management of any changes.
  • The solvency of the contractor is essential to the smooth running of the site.
  • The contractor may make assumptions in the event that you are not around constantly — your specification documentation must be as comprehensive as possible to avoid unexpected issues.
  • Your control over the supply chain stops with the main contractor, which is less hassle for you, but more reliance is then placed on your documentation and specification to ensure you get what you think you are getting.
  • If you delay or stop the work for whatever reason, the contract may well contain provision for payment of loss of profit to the contractor — generally once the contract starts, it is financially vital that it finishes!
  • The feeling of empowerment you get from managing the process is lost when a main contractor is engaged — equally, the feeling of despair when it is stressful is lost too!

IDEALLY SUITED TO: Busy full-time workers and those who live a long way from their building site; people who have never built their own home before and might not be confident of the process. While you’ll still need to be able to get to site at short notice and field telephone calls, it takes the daily stresses away.

Be Your Own Project Manager

HOW IT WORKS: The self builder would be responsible for the day-to-day running of the building project. This would involve interpreting the building drawings on site; finding, scheduling and directly paying tradesmen, from groundworkers to plumbers; organising and running the site, from hiring toilet facilities and security fencing to keeping the site tidy and dealing with the grey areas between trades; taking deliveries and working out where to store materials safely; ordering and paying upfront for materials and ensuring they get delivered when needed; and liaising with warranty and building inspectors. Effectively, the smooth running of project is entirely down to the self builder.

YOUR INPUT: As above. You’ll need to be able to visit the site before work starts (8am is the traditional start of a tradesman’s day) and once work has finished, every day until the end of the project. In addition, you’ll need to be able to get to the site at a moment’s notice to deal with deliveries, meet building inspectors, service providers and so on. There is also likely to be some DIY involvement as you’ll need to fill in between the trades.

Cost and Cash-flow Implications: Project management requires early contact with trades and materials suppliers in order to be able to come up with a realistic budget — critical if you need to arrange finance, and important to manage properly and keep a tight reign on cash-flow during the build. As many lenders offer release of stage payments in arrears of work being done, you’ll probably need to arrange temporary bridging finance to pay tradesmen at the end of every week. Alternatively, you could investigate specialist advanced funding through BuildStore (www. buildstore.co.uk) or Advanced Flexible Selfbuild Mortgage (www.afsbm.co.uk), which will provide money up front. You’ll obviously be able to save the builder’s profit (as mentioned above, anywhere between 20-40% on labour and materials) but bear in mind that experienced local builders are more likely to be able to negotiate better discounts/trade prices on materials and, to an extent, on labour. Ensure that you establish a relationship with a local merchant and set up credit terms to help with cash-flow.

PROS

  • You are the boss. Everything that happens comes under your control and you should get exactly what you want.
  • You control the programme, which can be tailored to match your design development — the need to know the tile colour is less critical when the foundations are being dug.
  • Direct management of the work can give you greater flexibility. You can accelerate or slow down the works to suit your individual requirements — if cash flow is putting pressure on, slowing slightly or delaying the work for a month may well ease this.
  • You know you are getting best value when you procure, because the process is open and transparent.
  • You will save levels of profit and overheads by eliminating the main contractor — anywhere between five and 15 per cent is possible, which is not inconsiderable.
  • The final fit and finish and specification is as detailed as you want it to be — as the project manager, you can look at the design, the drawings and the specification, and add as much additional detail, samples, mood boards and technical support as you feel is necessary to avoid any miscommunication/ ‘want of knowledge’ issues with the trades contractors doing the work.

CONS

  • Are you ready for the level of input it requires? The time required to manage the scheme is always more than anyone planned — your build will require you to be on site each day (or at least a fair part of each day), and your evenings will be spent scheduling, procuring and planning.
  • The emotional investment required is immense — I can guarantee that for every happy, fulfilled day on site, you will have a dark, depressing and debilitating day to match. The nature of co-ordinating trades, supplies, deliveries and site logistics is challenging, and is demanding even to those who have done it for years.
  • You need to be sure of your contacts and links to the industry — how will you find bricklayers? Do you know a reliable electrician? Recommendation is useful, but research and more research is vital.
  • You are funding the scheme, and are responsible for each payment to each subcontractor and supplier individually — you will need to set up a payment ledger to manage this, along with the hassle of individual valuation and measurement of works done every month/week.
  • The lack of credit line facility may require greater cash flow consideration when self managing. You will need to make upfront payments for goods and fittings, and in many cases the availability of trade discounts will be less than for an established contractor, subsequently negating some of the savings achieved by self managing the works.
  • You will need to carry insurance for the site — individual trades will hold their own insurances, but these will be limited generally to the value of the works they are carrying out.
  • Self-management requires a level of technical knowledge to ensure you understand the implications of the information you are dealing with. You also need to be confident that you can appreciate the subcontractors’ requirements, information and demands, and balance this with the legislative and practical demands of the wider scheme.
  • You need to be confident with scheduling, programming and preparation of short-term works programmes.
  • Health and safety on site will become your responsibility overall — the site is in your control.
  • Logistics will require planning — toilets, craneage, phone line, water, electricity, etc.

IDEALLY SUITED TO: People with plenty of time on their hands – or a lot of flexibility in their full-time jobs – who can handle stress and uncertainty; those living close to site and able to understand the building process.

Package Company

HOW IT WORKS: Package companies – also called ‘turnkey’ suppliers or ‘design and build’ companies – provide, as the name suggests, a one-stop-shop solution to the housebuilding process. They usually offer design, labour/construction and material supply as part of a fixed price contract. While the majority of package companies operate in the timber frame sector – where they offer manufacture of the frame and erection – a small number of package suppliers offer traditional masonry construction. The good news is that the traditional view of these companies – that they offer a limited range of standard house designs and tie the self builder into a complete and expensive onestop solution with a modest choice of finishing materials – is no longer applicable. The majority now offer an effective bespoke approach that can be individually tailored to a self builder’s requirements and circumstances. For instance, offering bespoke designs from an in-house designer; having a list of approved contractors to choose from rather than a staff team; and the ability in some instances to opt out of parts of the package and choose your own finishing materials. The reality of this competitive market is that the self builder can find a package company that will assist their project in any way they require.

The usual route, for illustrative purposes, is for the package supplier to carry out an initial site assessment; come up with a design and deal with planning issues; either manufacture the frame or arrange for materials to be delivered (or both); arrange labour or assist in finding it (and liaise directly with the labour); and provide finishing materials. Some may be willing to carry out project management services.

YOUR INPUT: Limited — which is the key reason why people choose this route. In theory the self builder can get as involved as they would like to, both on a project management or physical basis.

Cost and Cash-flow Implications: Most package companies in the timber frame sector require payment upfront as a commitment before the manufacture and supply of the frame (indeed this was one of the initial reasons behind the conception of the advanced funding mortgages described earlier). In general terms, all package companies, while offering free design services, will require regular payments (as a percentage of the total fixed price contract) throughout the process.

The package company route is likely to cost more than supplying materials yourself and is comparable to getting your builder to supply materials for you. You will save, however, the significant early payments that an architect would require and, in addition, will benefit from the knowledge that the package company’s designers are well versed in relating their designs to your build budget — something independent architects are not necessarily renowned for. This alone makes the extra costs worthwhile for many self builders.

PROS

  • Saves dealing with architects and ensures build costs are realistically tied in with the house design
  • The most hassle-free way to build
  • Many package companies have lists of approved contractors, bypassing the difficult issues of finding labour
  • Package companies provide reassurance and moral support during the process
  • Their buying power enables them to negotiate discounts with key materials suppliers that individuals might not be able to enjoy
  • Some package companies provide assistance with initial issues, like finding and assessing land, planning permission and Building Regulations, that would otherwise be left to the self builder

CONS

  • Limiting your own input invariably means paying for someone else’s — this is not a cheap alternative, although it might be cost-effective
  • The quality of the design depends on the skills of a limited choice of in-house designers — some are great, some are moderate
  • Some package companies offer a limited choice of finishing materials
  • Many require significant upfront payments

IDEALLY SUITED TO: Self-builders who require a helping hand with their project, because they are busy or inexperienced in the building industry. Package companies provide solutions to the numerous problems that self builders face: from finding and assessing land to finding labour.

Build It Yourself

HOW IT WORKS: You’ll be responsible for physically building the house from scratch yourself. While there are certain tasks that you won’t be able to carry out without the help of qualified professionals (unless you intend to take training), it is in theory possible to construct a whole house using your own labour. In addition, of course, you’ll be responsible for interpreting design drawings, ordering materials (and, therefore, having a good grasp of quantities), liaising with warranty and building inspectors, taking deliveries and organising the day-to-day running of the site.

YOUR INPUT See above. You’ll need to combine the physically demanding tasks of groundwork, bricklaying and roofing with skilled tasks such as plumbing and plastering. There is, of course, nothing to stop you mixing your own labour with bought-in labour where required; bear in mind that your own lack of experience might mean that you are likely to be slower than those around you and you’ll need to ensure that you’re not holding up the build process.

Cost and Cash-flow Implications: DIY is the only way it’s possible these days to build individual houses for incredibly tiny sums of money. Cash-flow implications are much easier to manage than with the other routes, as the only outgoings are for materials, for which you should arrange credit terms. You’ll need to factor into the equation, however, the lost earnings you’ll miss out on — particularly if you’re giving up work for a couple of years to take on this role.

PROS

  • Massive cost savings
  • Complete control over the project and no worries about finding labour
  • Huge sense of achievement and knowledge of every detail of your finished house

CONS

  • Factor in the lost earnings you’re sacrificing
  • Progress will be a lot slower than with professionals
  • The quality of work produced might not be to professional standard
  • Warranty and building inspectors are very likely to be a lot more stringent in their checks

IDEALLY SUITED TO: Either people who have been around the building industry and are willing to give up their time, or retirees who have a practical mind and can view the project as a hobby.

Mix and Match

The reality of the self build situation – and one engendered to a large part by the growing importance of the self build industry and its competitive nature – is that many self builders decide to mix and match several of the above approaches. Projects can be split into different sections – commonly up to, and after, weathertight stage is reached – and different approaches taken for each section. For instance, some package companies might be willing to let you take their design services and materials supply up to weathertight stage only. You might feel that you can handle the decorating and landscaping yourself but need a builder to manage the rest of the project for you. You might want a project manager for the critical first half of the build but feel you can handle organising the internal trades yourself. It really is up to you to work out an arrangement that works best.

TOP TIPS

Compromise: You can save money, time or quality, but you can’t save all three. Decide on your approach and accept that you will have to invest something.

Be Realistic: If you’re both running fulltime jobs, managing a building site is not for you. Assess your own situation.

Put Something in: Regardless of your route, you’ll need to manage your project.

DEFINITIONS

It helps to clarify exactly what it is we’re talking about when we refer to individual roles in the building world:

MAIN CONTRACTOR: The individual who employs individual tradesmen (such as brickies and electricians) when necessary on a building project. They are likely to have a wide range of local contacts and be able to call on tradesmen at short notice periods. They are also likely to get involved with work on site and fill in the gaps.

PROJECT MANAGER: Simply one of the functions of a main contractor. Project managers do not necessarily get involved physically on site but are likely to be constantly on the phone, organising trades and materials deliveries. They are responsible for bringing in the building project on schedule.

SUBCONTRACTORS: A subcontractor is a tradesman who works for a main contractor. They are the electricians, brickies, carpenters and plumbers who are not paid directly by the self builder. If a self builder is project managing the site, these tradesmen actually become contractors, as they are directly employed.

Tips for Successful Project Management

  • Find and contact local tradesmen during the planning process and get them organised ready to start when you need them.
  • Run a site office with copies of plans, standard site equipment, a phone and shelter.
  • Keep a diary of each day’s events and organise your quotations, certificates, plans, receipts and contacts meticulously.
  • Draw up a project schedule which will help you organise when labour and materials are required.
  • Organise materials deliveries so that you don’t have expensive materials lying around in unlocked places.
  • Keep the site tidy each day — it will speed up work the day after and minimise accidents.
  • Find time to plan. Don’t get caught up in the detail of each day’s progress — you’ll need to be constantly thinking ahead.
  • Make decisions early and stick to them — the hubbub of a busy building site is no time to be making snap decisions about kitchens, flooring and design issues.
  • Plan ahead and use the slow months before work commences to research materials and ideas thoroughly.
  • Account for the VAT reclaim in your upfront cash-flow plans. In other words, you will get much of the VAT you spend back in the months after the build has finished, but you’ll still need to find the cash to pay for it upfront.

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