How it Works
With this self build route, you employ 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. health and safety, toilet facilities and so on)
- working from the design plans
- The main contractor might also be responsible for ordering materials and ensuring they are on site when necessary
Firstly, you will need to choose a main contractor, going out to tender to secure quotes. (You’ll need to provide your Building Regulations’ plans and as much detail as possible in order to receive accurate quotes to compare on a like-for-like basis.)
Once you’ve appointed your contractor, it can also be a very good idea to visit the site at least once a week to check on progress, ensure that the drawings are being followed, and that the main contractor has everything they need. Your main role, aside from payrolling the project, will be to ensure you’re at the end of the phone when needed — which will be often. Communication really is key.
You will also need to make sure the main contractor is paid regularly and promptly — they’ll be paying for the subbies, but it’s your responsibility to ensure the cashflow is regular.
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 many contractors 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 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. 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.
- 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 health and 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
- 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 working practices
- You make one payment each agreed period (usually monthly) to the contractor, which cuts down the complexity considerably
- 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!
Advice for those looking to use a main contractor:
- Remember you are not signing all responsibility over to someone else. You will still need to make payments and check on work to be sure you are happy with progress
- Communication is key with this route. You need to feel comfortable talking to your main contractor about any problems
- Don’t just pick someone with good credentials — their abilities are the highest priority, but you also need to work with them on a personal level
Learn more from those who have taken the main contractor route.