Article By Julian Owen.

The biggest challenge presented by any building project is the risk of going over budget. It is all too common for unexpected costs to be revealed when quotes are received, or even after work has started. This article looks at what can be done to balance cost control with good quality, and avoid running out of money before your project is completed.

At the start, no one can give you a reliable, accurate prediction of the cost, only a very approximate estimate. Before you have drawn up plans and agreed the specifications, anyone who tells you that they know what a builder will charge you is bluffing. Without a lot more information about the size, scale and design, it is impossible for anyone to know this for certain. The correct advice is that there is a fairly wide range between the highest and lowest likely cost, but some people don’t want to hear this. Deep down, we all want to believe that we can get exactly what we want at a bargain price, so It is very seductive when we come across an apparently helpful company that tells us this is going to happen. Many of the stories about cowboy builders begin with a cheap quote for the work that is significantly below all the others. So it is better to resign yourself to the bad news that you cannot afford everything that you want, rather than be conned by someone who spins you a fairy tale involving easy money.

Ensure that you get realistic cost advice early. A building company is not necessarily the best source if there are no drawings and specifications to hand over. Responsible builders who are asked to ‘stick their finger in the air’ will tell you to come back when you have something more tangible, or suggest a range of figures that is too broad to be of any practical help. If a builder does indicate prices at this early stage, they will be optimistic. This understandable because he wants you to come back to him and you won’t if he seems expensive. Later on, when you return armed with a detailed design, the cost may go up dramatically.

Find a firm of architects who regularly work in your area, on projects similar to yours. If they tender regularly, they will have a fairly good idea of the latest fluctuations in the market and how much your money will buy. The range of cost they indicate will be quite wide at the start, so you need someone who will keep a constant eye on the financial implications as the design is developed. They must have a feel for where your project sits in the spectrum of cost, between the high and low extremes, throughout the design stages. Don’t assume a very optimistic figure from the start, because you may have to abandon the design if this gamble doesn’t pay off. It is a particular problem if you have obtained planning permission before you find out the cost is too high. If the only way to reduce it is to change the design you will have to resubmit, causing a delay of at least two months.

When the building is ready to start on site, good cost control is achieved by ensuring that the builder has quoted a fixed figure, enshrined in a sound, well-written contract. The unpleasant surprise of excessive extra costs arising as work proceeds can be avoided by having a clear agreement on price. Once a building company is on site, you usually have to use them for the extra work so it is harder to negotiate. If you have had an architect prepare a thoroughly detailed set of plans and specifications, you can hold the builder to the quote agreed in the contract and if there are any genuine extras, they are easy to identify. it will be relatively easy to work out a fair price for extras provided that you have taken the precaution of getting a price breakdown of each element of the job before the builder was appointed.

Apart from good documentation, take a methodical approach to finding the right builder. Prepare a long list, whittling it down to your favoured few and then, after you have received tenders and picked the most likely candidates, make more in-depth checks to ensure that your final decision is sound. In the current economic climate, a credit check is advisable if you do not know the company.

For any project, however small, a minimum of three quotes if possible. For larger domestic projects such as one off houses, get at least four or five. Because builders are constantly tendering for projects they may initially indicate a willingness to tender, then drop out before the submission date because they have been successful with another project. Always add one two more than your minimum requirement to be sure of getting enough prices to be confident that you will get a good range. Bear in mind that you are likely to be dealing with small businesses with limited manpower. The boss will spend most of the day managing sites and leave the preparation of tenders to the evenings and weekends. They will want to subcontract to plumbers, plasterers and electricians who in turn will have to prepare their own figures to feed into the final price tendered. All this takes time so to get a reliable figure allow an adequate tender period. For a small project this should be no less than three weeks, preferably four and for a one off house four or five weeks is reasonable. The builders must visit the site or existing building to ensure that their calculations are accurate. If they ask a lot of questions this is probably a good thing, because it shows that they are reading the information that they have been given and considered it carefully. However, if you give any extra details to one, it is essential to pass this on to all the others. If you don’t, you will not be able to compare ‘like with like’ when the prices come back.

Finally, once you have chosen your builder work should not start until the written contract has been signed. Do not use the builder’s standard contract, or one prepared by the contractors’ organisations – these are usually heavily biased against your interests. If any terms are written in faint grey text on the back of the quote you should cross them out and exclude them in writing from any agreement. The reason they are so hard to read is because the builder is hoping you won’t bother to look at them too closely. Fortunately there are some excellent standard contracts easily available from most bookshops, prepared by the Joint Contracts tribunal (JCT) that have been agreed by all sectors of the construction industry as fair and reasonable. The contract terms include provisions that make unfair increases in cost by the contractor very difficult.

Some of the Costs Incurred by Home Alteration Projects (£)

table tenders

Some Typical Items to be Included in a Detailed Specification for Pricing

  • General conditions
  • Rate of liquidated damages for overrunning
  • Timing of payments
  • Retention
  • Working hours
  • Who co-ordinates services
  • Excavations
  • Can any waste spoil disposed of on site?
  • Topsoil to be retained and re-used on site?
  • Floors
  • Solid ground floor, or timber joists?
  • Precast concrete 1st floor or timber joists?
  • Chipboard or solid concrete finish?
  • Underfloor heating required?
  • Walls
  • Brick colour, texture, surface and pointing style.
  • High level of insulation or minimum required by Building Regs?
  • Type of cills and heads, any specialist brickwork, eg dentil courses.
  • Any fireplaces, if yes, inglenook or standard, what kind of fire surround?
  • Pitched Roof
  • Trussed rafters or open roof?
  • Tile material e.g. clay or concrete?
  • Tile colour, and type, eg plain or interlocking?
  • High level of insulation or minimum required by Building Regs?
  • Valleys formed from lead or plastic?
  • Concealed soil stack and mechanical ventilation outlets through roof?
  • Flat Roof
  • Standard construction or specialist, such as single ply, or lead?
  • Internal Doors
  • Construction, e.g. Flush, pressed fibreboard, timber mortice, tenon and wedged?
  • Finish e.g. Self finished, painted, stained or varnished?
  • Ironmongery type e.g. brushed aluminium, brass finish, plastic
  • Ironmongery type e.g. lever handles, knobs, etc.
  • Locks e.g. Mortice locks, bolts etc.
  • External Doors and Windows
  • Construction, eg. Upvc, softwood, hardwood
  • Glazing e.g. safety glass, triple glazing, argon units
  • Style e.g. plain casements, cottage style, Georgian, real or fake leaded lights.
  • Ironmongery finish, and type e.g. Friction stays, letterbox
  • Locks e.g. rim latches, mortice locks, hinge bolts, etc.
  • Garage door type, style and mechanism
  • Joinery
  • Staircase construction e.g timber or concrete?
  • Staircase joinery style – handrails, bannisters and newel posts.
  • Who fits the kitchen, and do they do other things eg, lighting and tiling?
  • Fitted cupboards.
  • Airing cupboard.
  • Skirtings, trims and architraves
  • Sanitary Goods
  • Manufacturer and model number
  • Taps e.g. chrome, brass finish, monoblock, thermostatic mixer.
  • WC suite lid type.
  • Anity units
  • Heating System
  • Is the existing fuel source eg. gas, oil, electrical?
  • Has the existing system been checked?
  • Can the existing boiler cope with the extra demand of new rooms to heat?
  • Boiler type e.g. combination, mains pressured, condensing
  • Heating method underfloor, radiators, air blown, perimeter heating (in a Kitchen)
  • Any work to the heating system or gas supply pipes is to be carried out by a CORGI qualified plumber.
  • Electrical Services
  • Numbers of all sockets, lights, and switches for each room, located on a plan if possible.
  • Types of fitting, e.g. security lights wall mounted, pendants, bulkhead fittings.
  • Special circuits e.g. electric cooker
  • Other wiring e.g. computer networking cable, TV sockets, security system
  • Work must be carried out by a qualified electrician.
  • Test certificate to be issued on completion.
  • Surface Finishes
  • Walls – papered or painted?
  • Ceiling – any textured finishes?
  • Floor – e.g. quarry tiles, laminated, carpeted.
  • Tiling, where and to what extent?
  • External Works
  • Areas of hardstanding/driveway
  • Finish to driveway e.g. gravel concrete block
  • Type and location of new walls and fences
  • Gate locations and types
  • Any external features e.g. pillar light, outside taps.
  • Ponds and water features.

The Key Terms of a Building Contract

  • The following are some of the issues that should be dealt with by a building contract for a project of any size or complexity.
  • The Parties
  • Who you are, and who the builder is. You may think this is obvious, but some builders have more than one company. And sometimes parties to contracts have used the fact that have been wrongly described in a contract to avoid their liabilities.
  • The Identification of the Works
  • A summary of the scope of the works particularly important if the contractor takes on other work outside this contract, e.g. landscaping.

The Contract Documents

It is essential to state the specific drawings, by number and revision letter, as well as the version of the specification. These may be different from the tender documents if there have been revisions to price since tenders were received.

Agent

If you are using an architect or similar professional to manage the contract on your behalf, you must make clear what powers they have in the contract with the builders. You should also have a matching, separate written agreement with this contract manager.

The Tender Sum

This has to tie in directly with the contract documents, and must reflect any post-tender changes.

The Project Duration & Liquidated Damages

The contract should clearly state the time that work is to start, and when it is to be finished. A useful clause to have is one that states that any unwarranted delays will give you the right to make deductions from money due to the builder, usually a set amount for each week. These deductions are called liquidated damages.

Payment Terms

Contractors are usually paid every four weeks, or at specific stages in the job e.g. Dpc level. Also a small amount is held back until the end of the job, usually 5%. A smaller amount is kept until 6 months after work is finished (usually 2.5%)

Variations

These are items of the work that are omitted, changed or added after the contract has been signed.

Insurance

The contractor must have, and maintain adequate insurance. But this will probably not be extended to cover items that belong exclusively to you and are stored on site, unless you ask for it.

Solving Disputes

There should be a description of what parties can do if there is a dispute, and what to do if it cannot be settled.

 

Article written by Julian Owen 2013