Employing Building Contractors

One of the many advantages of employing an interior designer is the access gained to their pool of tried and trusted building contractors. However, the vast majority of contracting relationships are between members of the public and contractors whom they have sourced themselves. If you find yourself in this position, there are some guidelines you can follow that will make your life a bit easier.

There are two prices that will come into being during the life of the project. The first will be the estimated price tendered before the works are started; the second will be the price you are eventually charged. It is in the interests of your sanity and your savings that the two are as close to each other as possible. The accepted way to ensure your estimated price is reasonable is to get three different contractors to quote on the same works and choose the middle estimate. On the face of it this seems a good strategy. However, you are taking a gamble on the thoroughness of each contractor’s method of estimation. Also, every building contractor’s workload is in a constant state of flux. A company that has little or no space in its schedule will tend to quote high. In that way the expense and hassle of finding additional sub-contractors to carry the extra load is covered. On the other hand, a company hungry for work may quote very competitively and hope that on-site variations will add some cream once the project has been won. Many other factors can come into play that are personal to the contractor and some may even be based on the contractor’s first impression of you!

The secret to getting an accurate quotation is to supply your contractor with a detailed specification for the works contemplated. This is not as easy as it sounds. Try the following exercise for yourself before reading any further:

Write out a detailed specification for someone else to use in making a cup of tea! Your specification may look something like this:

• Put kettle on;
• Boil water;
• Put tea in teapot;
• Pour boiling water into pot;
• Stir;
• Wait;
• Pour out tea.

On the face of it this seems reasonable. But look again and see how much prior knowledge you have assumed. “Put kettle on” – put kettle on what? “Pour out tea” – onto the floor? This may seem silly but there is a serious side. We’ve seen job specifications that instructed the contractor to “Remove old kitchen units.” The contractor in question charged extra to cart the debris off-site. This cost would have been included in the original estimate had the specification read “Remove and dispose of old kitchen units”.

Sitting down and thinking hard about the scope of the works and committing each stage to paper will put you in a position of control. Send the specifications to your chosen contractors before they turn up on site to do their estimate. The contractor will have considered the specifications prior to his visit and it will be easier to engage him in meaningful dialogue during his visit. The specifications will encourage him to ask searching questions and offer opinions more freely. Additions and exclusions can be discussed and together you will develop a deeper mutual understanding of the project in hand.

We have found that a thorough, well-written set of specifications will draw very similarly priced estimates from different contractors. It is now our practise to seek only one quote from the contractor that we feel is best suited to the job. The second powerful advantage of good specifications is the effect they have at the other end of the project. The onus is on the contractor to identify any requested on-site variations as being outside the specifications; that is, additional to the scope of work that you originally detailed.

All jobs will have variations that occur during works on-site due to unforeseen events. But well-written specifications will help to close the gap between the estimated price and the price that you actually pay. It’s worth mentioning at this point the essential ingredient of any building project -- the contingency fund. Always ensure it stands at no less than 10% of the expected expenditure.

So, how do you choose your building contractor from the many hundreds that are available? Recommendation from friends or colleagues is always a popular route. But bear in mind that the Bloggs and Company that could do no wrong at your friend’s house may not be the same Bloggs and Company that turns up at your door a year later. Any main contractor is only as good as the tradespeople they employ. The circulation of good tradespeople is a feature of the industry and it is rare for main contractors to run the “same team” over prolonged periods. If you have a recommendation from someone you know, ask the contractor concerned to provide testimony from people you don’t know. Make a point of following this up with at least a telephone call, or make a visit if the property is local.

Always ask the contractor for a copy of his insurance certificates and his VAT number. If the contractor is not VAT registered then the alarm bells should start ringing. It’s almost impossible to operate even the smallest building concern without reaching VAT registration thresholds.

Don’t be tempted to enter a cash deal to avoid VAT. There is no escaping the fact that this is tax evasion and therefore illegal (how would you feel if the contractor offered to sell you a stolen car?). Paying cash means you have no invoice and the job “doesn’t exist” in the eyes of the authorities. This means you will seriously compromise your legal rights if something major goes wrong.

Once you’ve chosen your building contractor you should agree on a start date and reasonable project duration. Some people insist on penalty clauses for overrun and prefer to agree a fixed price contract. A penalty clause will certainly focus your contractor’s attention. But it may just focus him on avoiding the penalty at all costs, which may, in extreme cases, lead to important corners being cut. In our experience it is better to aim for best build quality and attempt to fit that into the preferred timescale.

Similarly, a fixed price contract may lead to downgrading of materials to claw back on previous overspends. Far better to have a system of “variation requests” where increases in expected expenditure are detailed in writing by the contractor for your approval. That way your quality of build is assured and you can keep a close track on your contingency fund.

Agree a payment structure with the building contractor prior to commencing the project. A typical payment schedule looks like this:

• 10% deposit to secure start date;
• 20% on or just after start;
• 30% interim;
• 30% interim;
• 10% at completion of snagging.

The exact timing of the interim payments will depend on the length and complexity of the project and the requirements for purchasing of materials. Also remember that the contractor has weekly cash pressure for wage bills and may have limited credit facilities for building supplies. Cash flow is therefore very important to their business.

As long as your contractor is working well there is no reason to be cagey about payments. Some people withhold a large portion of the contract value against completion. This is unnecessary in most cases and just makes life difficult for the contractor. Be realistic about the sum you hold against snagging. A retention of 10% of the contract value is generally enough to ensure the snagging gets done.

Major works are always going to be stressful and disruptive but thinking ahead can reduce the effect. Make your expectations of cleanliness known at the outset and the contractor can factor in any extra costs involved (I’ve been on a site where a labourer spent all day, every day clearing up behind everyone else). Hiring an outside Portaloo for the builders can make a big difference to your quality of life – especially on a Monday! Also, probably most important of all, make sure you have plenty of tea!

If you have chosen your contractor well and maintained a good level of communication throughout the project then you have a high chance of a rewarding experience that delivers the results you desired.