Engaging contractors and suppliers – the work involved and the processes which need to be followed – will be wholly different dependent upon your overall procurement strategy. Those seeking a main contractor would be best advised to follow a traditional tender process which is usually organised by a project manager, a surveyor or your architect, however, for those choosing to manage the project themselves, the rules are less clear.
Searching for, and engaging a main contractor
By definition, you will be looking for a contractor who will be prepared to construct your new house for an agreed price, to an agreed specification and within an agreed timetable; known as the eternal time, cost and quality triangle! Your professional adviser will normally prepare what is known as a detailed specification and schedule of works, first mentioned in my October 13 article on specifications and drawings, which will be packaged with your detailed drawings and sent to between three and four well researched companies for a quote. This ‘tender’ exercise is an invitation for these contractors to consider your project within a competitive framework and where they have all the information they need and plenty of time to ask questions and seek further clarification.
Once their prices have been submitted, usually to a specific deadline, your adviser will analyse all of the responses, identify any gaps, collect any missing data and then make recommendations to you as the client on how to proceed. Usually the preferred contractors are interviewed and then once a firm decision has been made the successful contractor, and their consequential supply chain, are engaged under contract between you both. Depending on the type of contract, your professional adviser may be retained as either a contract administrator or a client representative or, alternatively, you may choose to proceed without professional support from here on in.
In my view contract options are best taken from the JCT suite (Joint Contracts Tribunal) as they are well understood by professional builders and cover most management options including the traditional method, construction management and design and build. Alternatively the FMB (Federation of Master builders) has produced what it calls a simple plain English style contract which, although more limited, is a useful alternative.
As far as payment terms and the programme are concerned, obligations for both parties will be clearly set out in the contract and your lender, or financial advisers, would have easy visibility of what is intended should they want to get into that level of detail.
Simple, relatively straight forward and, if all of the correct steps are taken, a much lower risk option but one that will cost accordingly – see last month’s article on procurement options.
Now try and replicate the above, albeit not in the same detail, across 20 or so different works packages and with a multitude of material suppliers, and you can see where the administrative work comes from in being your own project manager.
Choosing your suppliers.
When it comes to materials you’ll find that all major merchants will want your business and you should select one or two in your area as a general supplier. Prices will vary widely which, to some extent, is a function of negotiation. My advice is to visit all of the general merchants near to you and arrange a meeting with the branch manager. Take your plans, run through your timetable and indicative requirements and make a value judgement as to their level of interest, how helpful they are prepared to be and what kind of stock they tend to carry. Ask for some sample pricing, establish a discount level, agree a credit account facility and then you have all the information you need to start placing orders with the company of your choice.
Some folks like to constantly shop around in order to secure the best price for every order whereas I have always taken the view that there is a trade-off between building some supplier loyalty versus committing extra time to phoning around every time you need something. Loyalty counts for a lot when unforeseen mistakes happen, and they will, as materials either need to be changed, re-stocked or extra supplies provided quickly! And good advice dispensed over the counter will begin to dry up if orders don’t ultimately result.
When it comes to bespoke orders from specialist suppliers, your buying power and trading history won’t be transparent and you’ll probably find that sizeable deposits will be required as well as the balance on delivery, or quite often before. You’ll need to manage these outgoings in terms of your overall cash flow which is as much to do with the timing of your orders as well as the terms of the transaction. Some orders also require design, like block and beam floors and mechanical heat recovery units and others just rely on critical dimensions like the windows. You must keep a record of exactly what drawings and their revision numbers have been sent to which supplier and on which date. This is your responsibility and one which could become costly if you are not able to manage your paper trail chronology!
The important thing to remember about suppliers is that they will have established trading conditions and it is going to be those conditions that form the supply contract between you.
Hiring individual trades
When it comes to individual tradesmen, however, there are usually no standard conditions upon which to rely and these must therefore be created.
Firstly, finding good tradesmen is best from a known recommendation. Websites are springing up left, right and centre to help us with this but a personal endorsement from someone you know counts for a great deal. Most of us have friends and family who have used or worked with builders and so this is the best place to start. Go and see examples of their previous work, take some relevant photographs if you can and use these as a basis for a visual understanding of quality.
You should provide your tradesmen with a written brief of what you want. I divide all of my specifications and schedules into works packages so that the relevant one can be isolated and given to an individual tradesmen for quoting purposes. But, this could be as simple as a written list so long as it draws together everything you want in an unambiguous way. Simply sending out your drawings, on the other hand, is a recipe for disaster and will leave pricing gaps across all of your major groups.
Their price should be obtained in a written form, preferably on a letterhead and any subsequent qualifications agreed in writing, which could be quite a number of times. No matter, you now have an audit trail and thus the basis for demonstrating how an agreed price has been arrived at and on what terms. This should be drawn together on one final exchange of documents where you have the opportunity to summarise the agreed qualifications; payment terms, agreed retentions, start dates, completion dates, material supply obligations etc. Seeking written confirmation and agreement to your summary helps to close the circle providing a written record of your agreed contractual arrangements.
From a practical perspective this is about as good as it will get for sub-contractor appointments unless trading conditions are thrust upon you whereupon my advice is that you should read them before agreeing to their use! If in any doubt always seek some professional advice.
This article was written by Tim Doherty, and originally published for Build It Magazine. Tim is the Director and Principal Surveyor at Dobanti Chartered Surveyors, a building surveyors based in Tunbridge Wells, Kent. Dobanti offers a wide range of property services including design and planning applications, tender development, appointment of contractors, project management of builds and renovations, building surveys, and more. Get in touch for more information, or read more online now. Further articles and blog posts can be found here.