When I give a price for my services on a project, I price the work in stages. The outline design, final design to planning and construction information for building regulations stages are fairly easy to explain and my clients can understand why they need it – the result is a set of drawings showing the proposal, in conformity with the statutory requirements, which show the builder what he is expected to do. Some architects offer this as their main service, or as a “plans only” service. The architect draws up the scheme and gets planning and building regulations approval, then hands the job over to the client. The client then has to find a builder and get the work done on site.
I like to offer two additional services – I organise the tenders and administer the contract. For the tender I put together the list of builders and send out the drawings and specification and chase up the responses. It is fairly straightforward and I know several local builders, but most importantly I use a proper procedure so that the prices can be compared. Sometimes I like to think that the contractor is pricing more a little bit more carefully because they know an architect is involved. Perhaps, like pretending to know a bit about cars at the garage, it makes a difference, at least in the imagination. A good builder should give you a good price regardless. The key thing is to ensure that the builder has a good clear set of documents to price.
Once the client has reached found a bidder they prefer, I like to call a meeting between the client and contractor. We go through the quote to check what is included in the price, such as whether the client will order the bathroom suite themselves, and if everyone is happy, I will witness the signing of the contract. The contract, and the administration of the contract, is what I want to talk about now because everyone asks about it and it is not so easy to explain.
If you were to ask a builder to do some work for you to today, you would be forming a contract – that is an agreement for them to work for you and for you to pay them – but there is a good chance that the terms of that agreement would not be clear. If they give you a quote you might think you know the price and they might think that you are bound by the tiny green writing on the back of their letter. If there are extra items or delays or problems with the work, you will probably find yourself negotiating with their goodwill and your money as the bargaining chips. If your builder is good they will value their reputation and try to help because you can’t build a business on unhappy customers – but what if there is no understanding?
For my projects I usually recommend that the client sign a proper building contract, usually the JCT Minor Works Contract. This is a little A4 book of about 40 pages that sets out the agreement between the client and the contractor in terms which are fair, recognised and tested in law and are easy to understand. It’s a contract for small building jobs which have been designed and will be administered by an architect. The first bit – the Articles of Agreement – you fill in. The second bit – the Conditions – set out the terms of the contract. My job, as the contract administrator is to ensure that the parties fill in and sign the agreement properly and that the parties stick to the terms. Because I have read them and I know what they are! I can’t do anything other than recommend you read the actual contract, but perhaps as well you could have a look at my handy guide below.
The Articles of Agreement are as follows: the date, the names and addresses of the parties, a simple description of the project, the list of contract documents that describe the work which the Contractor will do, the contract sum which the Employer will pay, the date when the works will start and when they will finish. Now you have read through this you are probably wondering why anyone would undertake a project on site without agreeing these things. Well, it happens a lot. Next there are the details, the first of which is called the liquidated damages. This is a legal term which means specifically the penalty for late completion owed by the Contractor to the Employer under the terms of the Contract. For example, if the Contractor is finishes one week after the due date for completion without cause under the contract, one week’s liquidated damages must be deducted from the contract sum due. I like to set a day rate of the cost one or two labourers on site, usually between £100 and £150. On a small project that is enough to ensure that the contractor makes diligent progress. Next is the rectification period, usually three months. In this period of time any defects appearing in the work after practical completion must be made good by the builder. So any cracks, leaks or electrical faults in the works are to be fixed at no cost to the client during this period. Next is the retention. This is the sum of money held back from each payment which is only to released when the project is (i) completed on site and (ii) at the end of the rectification period. This small sum of money protects the client in the event of a defect or non completion as the Contractor must complete the work to receive payment of this fraction. It’s usually 5% to 2 1/2%. Then there are clauses for insurance and dispute resolution. If the parties come into dispute under the contract – usually about money – they can go to court. But if they agree to it in the contract they can also use arbitration, which is cheaper and quicker or adjudication, which is a court like process but quicker. You want arbitration, it’s cheap and quick. You can still go to court if for some reason you want to. Then the parties then have to sign it and the agreement is made.
Okay, that’s enough for today – let’s talk about the Conditions and the contract administration next time. See you then!