A Formal Contract is Essential to Avoid Conflict Down the Line
The majority of homebuilding projects are undertaken without any form of written contract. Most rely on the simple expedient of ‘offer and acceptance’, whereby the builders writes to the client offering to do the work at a given price, who in turn writes back, accepting the quotation. In most cases this works out just fine. In some cases, however, either or both parties can rue the day they don’t use a contract.
A contract doesn’t have to be a huge legal document — some are just 5-10 pages long with simple questions. None are worth much until things start to go wrong — then they become worth their weight in gold. The essential parts deal with when and how the money is to be paid and the critical section deals with how any disputes will be sorted out. All else is largely negotiable and may be subject to variation due to site conditions.
Pay Subcontractors on Time, After Work Has Been Inspected
There are two types of subcontractor: ‘labour only’, such as bricklayers, carpenters etc., and ‘supply-and-fix’, including plumbers and electricians. The former often require payment – in cash – at the end of each week and if it’s not there, they may well de-camp to another job. If possible, leave an incentive for them to finish — i.e. divide a 10-week job’s wages by 12, saving a triple payment for the end, when you’re satisfied everything’s been done correctly.
The supply-and-fix trades may want paying in two stages: on completion of the first fix or carcassing (when they’ve put in all the background wire and pipe runs) and on completion of the job.
Builders should have a written contract with you, detailing the stages of the build at which they should be paid and the amounts. Make sure that each stage has been reached before paying, and that the work has been passed by the building and warranty inspectors.
Avoid Paying for Materials Upfront
Most builders’ merchants require their accounts to be settled at the end of the month following the month of invoice — so any requests for payment prior to the goods’ delivery must be questioned. There may be times when, for example, a plumber will ask for money upfront to pay for a special item such as a boiler. This is fair — but it’s better to eliminate any risk by purchasing it yourself. If goods are made bespoke to order, such as a timber frame, then it’s reasonable for the manufacturer to ask for a large payment upfront. In this case, the safest option is to pay the money into a client’s or escrow account, where it can’t be withdrawn until the goods are delivered.
Don’t Come Across as Desperate or it will be Reflected in the Price
It’s a sad fact that the contractor you know often comes in at a higher price than all of the rest. Why is that? It’s because they feel that you’re a certainty, a captive audience — and they don’t feel the need to minimise their prices. They will even convince themselves that they’re doing you a favour and that they’re your best bet.
You may well end up lifelong friends with the tradespeople who work on your site; you may on the other hand end up lifelong enemies if things go badly or you have to take the decision to terminate a contract.
But first-name terms should evolve as the job progresses. When they’re just people quoting for the job, the premature jump to first-name terms may lead them to believe that they’ve got you on a hook. Keep it fairly businesslike in the early and pre-engagement stages. On the other hand, self-employed trades can pick and choose where and who they work for — so you’ve got to be likeable.
You want tradespeople who are going to be helpful. But if you are too needy, then don’t be surprised if that’s reflected in the price.
Be Prepared for Every Eventuality, to Avoid Costly Mistakes
You can’t remove every uncertainty from a building project. However carefully you plan, things will go wrong – bad weather might grind work to a halt; problems may occur within the ground which nobody could or would foresee – but you can minimise the damage. A full site survey giving you accurate levels will determine the amount of underbuilding. A soil investigation should determine the precise nature and type of foundation you must use — but even here, it’s not foolproof. A soil investigation will be determined by trial holes or pits — but nobody knows exactly what’s in between all those holes until the actual foundations go in.
The most important thing is to have clear and precise plans together with a full specification. Loosely drawn plans lead to ambiguities in pricing and nasty surprises on site. Making changes to plans without providing everyone on site with the latest version, and removing old plans, will lead to mistakes. The lack of a proper specification can result in material overruns or shortages or, worse still, the wrong choices being forced upon you if you’re going to maintain that all-important continuity on site.
Thinking ahead is how you iron out most of the problems, so make sure that you’re fully aware of the sequences of events through a building project and that you know what happens when — and can plan for the event.
Accept That Things Will Take Longer Than Quoted
“It should take about three weeks,” can be roughly translated into, “It’ll take just over a month.” That may or may not be the contractor’s fault. Bad, and especially cold weather, can put a stop to all activities on site. But the plain fact of the matter is that many builders and subcontractors underestimate the time the job will take. If they’re on a fixed price, then it shouldn’t cost you more. But you will need to make sure that any payments reflect the progress and that if things are slowing down, the payments reflect this.
“We’ll be there on Monday morning,” may well mean later in the week or even the following week. Why is that? It may be the mark of a contractor with the wrong sense of responsibility. In which case, when you made your initial enquiries about him/her, that fact should have been flagged up by their previous clients. But it could equally be that they were unavoidably delayed on their previous job by, say, bad weather, and rather than leave that job unfinished, they’ve delayed starting yours. One day, when they’re finishing off your home, you might just be glad of that trait.
Actually, whatever they say, it’s what you say that counts. Left to their own devices, many builders and subcontractors will do what’s quickest, cheapest and easiest for them. So you need to make clear from the outset your expectations and specifications for each task. But you need to check them out first of all and then tie them down to a clear price and as precise a timetable as possible.