DESIRED OUTCOME OF DOMESTIC BUILDING WORKS CONTRACT

Transcription

1 DESIRED OUTCOME OF DOMESTIC BUILDING WORKS CONTRACT This contract is for use on domestic projects not exceeding 75,000 (ex VAT) where no architect, building surveyor or consultant is employed to oversee and/or advise.

2 Aims and objectives The object of this form of contract is to provide fair conditions for both the householder (Client) and the workforce (Contractor), and to minimise any additional costs due to work being required which is not implicitly detailed in the contract or drawing(s). This contract, together with all further items referred to in this contract form a legally binding document which the signatories agree to accept as a legally binding contract. The Contract is intended to outline fair and reasonable terms for both parties. The Client can expect works which comply with appropriate drawings and specifications and which function entirely to their intended purpose. The Contractor can expect the agreed fees to be paid at the agreed times subject to the Contractor s obligations having been met. Items which are omitted from the drawing(s) but should reasonably be expected to form part of the completed works will be deemed to be included in the Contractor s quote. The Contractor should draw on previous contract experience to look at the likelihood of possible unforeseen works and inform the Client of any such possibility. The submitted price includes for Contractor s costs made necessary by the Contractor failing to undertake careful inspection of the works before submitting a quotation. It is assumed, for the purposes of this contract that the necessary permissions (Planning Permission and Building Regulation Approval) for the intended work have been granted by the authorities. If this is not the case full details of who is responsible for obtaining these permissions must be outlined in Clause 4, Description of Works. It is also understood that the Contractor who signs this document understands and accepts they are fully responsible for the health, safety and welfare of employees and any others who may be affected by what they do. This includes sub-contractors, casual or part-time workers, trainees, customers, neighbours, sales people and members of the public. Full details of Health and Safety implications can be seen at 2

3 This agreement is dated and is between the Client and the Contractor who together are called the Parties in this agreement. NOW it is agreed between the Parties: 1. INTRODUCTION 1.1 In order to simplify this agreement, we have given a specific meaning to some words, expressions and concepts. Capitalised terms used in this agreement have the meanings given in Schedule 1 (Definitions). 1.2 Italicised words appearing between square brackets in this agreement are instructions and directions for completing this agreement. These words are inserted for convenience and shall not form part of this agreement. 1.3 Please complete this agreement in conjunction with the attached notes. The notes shall not form part of this agreement. 2. CLIENT DETAILS Name(s) Address Telephone number(s) Mobile number(s) address(es) Address at which Works are to be carried out (if different from the address above) 3

4 [Use further pages if necessary] [Please delete as appropriate:] The Client will be living in the property during the Works The Client will not be living in the property at any time during the Works 3. CONTRACTOR DETAILS Name Address Telephone number Contact name(s) and mobile number(s) Name Number Name Number Name Number address(s) address(s) address(s) Public Liability Insurance Number and Issuer: [Please see separate note regarding Insurance in the attached notes] 4

5 VAT Registration no: As a member of the Trade Association known as: And/or details of insurance backed guarantee and issuer: 4. DESCRIPTION OF THE WORKS: 5

6 [Please use separate sheet if required] List of drawings and documents used to provide details and prices of the Works. Copies of all of these documents must be kept with this agreement and form part of this agreement. [For example, the Contractor s quotation, drawings, specification and any other documents, including photographs, used by either party.) Copies of any accompanying paperwork should be initialled by the Client and Contractor, dated, and kept by the Client with this contract. Verbal agreements should be put in writing, signed and added to the contract documents.] 6

7 5. TIMESCALE OF WORKS 5.1 The Works shall not commence until any planning permission and party wall consents have been granted. 5.2 Start Date, Completion Date [Delete either Option 1 or option 2 as appropriate] [Option 1] The agreed Start Date is: And It is expected that the works will be completed by: [Option 2] The Works will take: (Date) [state the number of days/weeks the Works will take to be completed] from the Start Date. The parties agree that the calendar day for the Start Date will be agreed between them at a later date, but shall in any event be no later than: [state the last date by which the Works must have commenced] 5.3 The Contractor shall not be liable: (a) (b) to pay any penalty to the Client; or for any losses, costs or damages suffered by the Client, as a result of the Works not being completed prior to the Completion Date. 6. COST OF THE WORKS Value of Works excluding VAT Value of Works including VAT Amount of VAT and VAT rate Total Price % 7

8 [Please tick if this value is a:] Quotation Fixed price ESTIMATE [Please give details of any Estimate] [Please use additional sheets as required] 6.1 Where a Quotation has been agreed it can only be varied to take account of Additional Works or where a portion of the Works detailed in the Quotation is not required. 6.2 Where an Estimate has been given, the Client must consent in writing in advance to any increase in the Estimate of more than 5% before incurring any liability with respect to the Estimate to the Contractor. 7. VARIATION TO WORKS 7.1 In the event of any variation to the Works, the Contractor shall charge the Client the following hourly rates for tradesmen and labourers and the following percentage mark-up on the provision of materials, overheads and profit: Tradesman per hour: Labourer per hour: Material mark-up as % = Overheads/profit as % = 7.2 The Contractor shall not be permitted to vary the cost of performance of the Works where a Fixed Price has been agreed. 7.3 The Client is permitted to vary the Works by agreeing the nature and cost of the variation with the Contractor and completing and signing an Agreed Variation Schedule with the Contractor. Such a schedule can be found at the end of this contract. 7.4 The Client reserves the right to obtain quotes from alternative contractors for any variation providing that this does not delay the Contractor in any material way. If the Contractor is delayed it may recover the reasonable costs it incurs as a result of such delay in accordance with the rates set out in Clause 7.1. In addition, the Completion Date shall be extended by the number of days of the delay. 8

9 7.5 Before any Additional Work is started, the Parties shall complete an Agreed Variation Schedule for the Additional Work which shall detail the cost of the Additional Work in accordance with the rates set out in Clause TERMS OF PAYMENT [Delete either Option 1 or option 2 as appropriate] The Client shall pay the Contractor 95% of the Total Price on [Option 1] completion of the Works as set out below (if requested by the Contractor). [Option 2] The Client shall pay the Contractor in the instalments set out in the Agreed Instalment Payment Schedule which can be found at the end of this agreement at the times set out in the Schedule (including for any Permitted Variations which have been completed by that time). [The Agreed Instalment Payment Schedule is available at the end of this contract and should be completed and signed by the Client and Contractor and copies held by both Parties. 8.1 Regardless of whether Option 1 or Option 2 is chosen above, payment from the Client shall only be due to the Contractor 7 days from the date on which the Contractor supplies the Client, or the Client s third party payment agent (as applicable), with a properly issued VAT (if applicable) invoice, detailing the part (or whole) of the Works to which such invoice relates (including any Permitted Variations) including an itemisation of items that attract VAT and the rate at which VAT is charged (if applicable). 8.2 If an invoice cannot be produced by the Contractor within a reasonable time for any Permitted Expenditure, payment by the Client for such Permitted Expenditure shall be conditional on the Client being provided with an original receipt from the supplier. 8.3 If a third party payment plan has been implemented, the terms and conditions of such plan shall override any contrary provisions of this contract. 8.4 In any event, no request for payment of any kind which is not expressly stipulated in this contract shall be made by the contractor. 9

10 9. RETAINER 9.1 The Contractor agrees that (unless otherwise agreed between the Client and the Contractor in the Agreed Instalment Payment Plan Schedule) the Client shall withhold an amount equal to 5% of the Total Price, including any Permitted Variations, as security against the performance by the Contractor of any remedial work to remedy any defects in the Works. This is called the Retainer in this agreement. 9.2 After Completion, the Client shall test the Result to ensure that the Works have been performed to the required standard and that there are no defects in the Result. 9.3 Prior to the expiry of 14 days from the Completion Date, the Client shall either provide the Contractor with a detailed list of any defects or confirm in writing to the Contractor that there are no defects. 9.4 The Contractor promises and agrees to remedy any defects identified in the Defects List within the period of 14 days of the date of receipt of the Defect List. On completion of the further works to remedy the defects detailed in the Defects List, the Client and Contractor shall inspect the Result together. If the Client and Contractor agree that the defects identified in the Defects List have been remedied, the Client shall confirm in writing to the Contractor that there are no defects remaining. 9.5 Within 3 days of the Client giving a confirmation to the Contractor detailed in Clause 9.3 or 9.4, the Client shall pay an amount in respect of the Retainer to the Contractor. 10. THE CONTRACTOR S RESPONSIBILITIES 10.1 The Contractor promises and agrees that: (a) (b) all materials used to perform the Works will comply with the relevant British Standards and be covered by their manufacturer s guarantee. Should any material fail as a result of a manufacturing fault, the guarantee will be pursued by the Contractor on the Client s behalf at the Contractor s own cost until a suitable outcome is achieved which restores the Result to the condition set out in this agreement; it shall not make (or permit any third party to make) any financial claim against the Client in respect of any failure of any material, product, design or construction used during the Works and/or in the Result. The Contractor takes full responsibility for the quality of all materials, 10

11 (c) (d) (e) products, design and construction used during the Works and/or in the Result except for the matters set out in Clause 11.2; manufacturer s recommendations for use will be followed at all times. Where a particular product or material is recommended to work alongside any other product or material, a similar product or material may be used (with the consent of the Client) providing that it is of the same quality and its manufacture is intended to fulfil the use to which it is put by the Contractor; over and above any manufacturer s guarantee, it will guarantee its workmanship for 12 months from the Completion Date and will provide full details of its own insurance-backed guarantee for the workmanship by any contractor or individual under its control for any part of this contract. Should workmanship be called into question and shown to be at fault, the full cost of rectifying the defects in the Works shall be met by the Contractor; it shall have in force valid public liability insurance with a coverage of no less than [ 2 million] throughout the term of this agreement; (f) it will advise the relevant local authority (if required) no less than 48 hours before the Works commence in order to comply with building regulations; (g) (h) (i) (j) (k) it will take all reasonable care to protect areas, objects and items not directly associated with the Works but in relation to which a possibility exists that they could be damaged by the Works, including without limitation any neighbouring properties; it will use all reasonable endeavours to minimise the risk of any pollution, disturbance or environmental impact created as a result of the Works and will immediately inform the Client and the local authority (if required) of the occurrence of any pollution or environmental impact; use all reasonable endeavours to protect the health and safety of all those entering the Site, dwelling, gardens or outhouses; keep rest and break areas clean at all times with all rubbish to be disposed of in the appropriate place; if waste skips are to be used it shall ensure that: (i) (ii) they are placed only in areas agreed with the Client; and a license permitting containers to be placed on a public highway is supplied (if required) and that the terms of any such license are complied with. 11

12 (l) (m) (n) (o) (p) (q) (r) when the Works are not in progress on the Site, or any part of the Site, it shall keep areas not being used for work or storage in a clean and tidy condition; it shall ensure that any temporary protection provided by the Contractor is safe, weatherproof and does not create noise pollution which may cause discomfort to the Client or any of its neighbours; if the property is not occupied by the Client during the Works it will take all reasonable precautions to prevent intruders entering the Site at any time; it shall not sub-contract any part of the Works to any person unknown to the Contractor without the prior written permission of the Client; it shall ensure that it performs all its legal duties including with regard to the charging of VAT, payment of employer PAYE of employees and its Corporation Tax; it will keep any toilet facilities (whether provided by the Client or the Contractor) hygienically clean at all times; and it will not dispose of (or permit the disposal of) waste on Site except in the appropriate, external, main drainage The Contractor makes a statement and a binding promise (called a warranty) to the Client at the Completion Date and on each day thereafter until the expiry of the period of 12 months from the Completion Date that the following statements are true: (a) (b) (c) (d) (e) any material and/or product used during the Works and/or in the Result will operate in the way intended by the manufacturer; any material and/or product used in the performance of the Works and/or in the Result will comply with the relevant British Standards and be covered by their manufacturer s guarantee; it has in force valid public liability insurance with a coverage of no less than [ 1 million]; and in relation to each operation undertaken in any room or area, and every appliance or fitting used, the functions of that room, rooms, area or appliance operate in a manner appropriate to the use of that room; every part of the Works complies with all planning and building regulations including water, plumbing, electrical, and gas safety legislation in all forms which relate to work on domestic installation The Contractor will not be liable for the following materials and/or products which were provided by the Client: 12

13 [Continue on a separate sheet if necessary, such a sheet to be initialled by the Client and Contractor and each to hold a copy, the Client to keep his copy with this contract.] 10.4 The Contractor promises and agrees to keep an appropriate number of tradesmen on Site for the duration of the contract and will stay in good communication with the Client in the agreed manner should anything prevent the Contractor and their representatives attending the Site: The Agreed form of communication will be: [Please include details of the agreed communication methods and save all messages] Telephone landline: Telephone Mobile: (A log must be kept of all telephone calls) SMS Text messaging: THE CLIENT S RESPONSIBILITIES 11.1 The Client promises and agrees to: (a) (b) unless agreed in writing by the Parties, make available to the Contractor water and electricity at no charge to the Contractor on condition that such services be used by the Contractor solely for the provision of the Works; give the Contractor no less than 3 days written notice of any dates on which the Contractor is not to be admitted onto the Site for any reason. The Completion Date shall be extended by the duration of any such exclusion. The Contractor shall be permitted to pass onto the Client for any costs reasonably incurred by the Contractor as a direct result of the exclusion at the rates detailed in Clause 7.1; (c) take all reasonable precautions to protect its own health and safety and those of any members of its household or anyone visiting its household; 13

14 (d) (e) (f) advise its household insurer that it is having building work done at the Site; permit the Contractor to carry out the Works in any order that the Contractor reasonably deems most suitable in order to ensure compliance with the timetable detailed at Clause 6. The Contractor shall bear all responsibility for maintaining the integrity of the Works and meeting the timetable detailed at Clause 6 should the normal sequence of the Works be varied as a decision of the Contractor; ensure that the Contractor is aware of each area, object and item which the Client wishes to keep free from damage within the working area. Wherever possible, vulnerable items shall be removed by the Client from the working area and placed in a safe place under the control of the Client. 12. HOURS OF WORK 12.1 Hours of work are to be agreed between the Client and the Contractor and are as follows: Mon-Fri am to pm Sat am to pm Sun am to pm Any other arrangements 13. RESOLVING DISPUTES [It is recommended that the Client and Contractor shall agree between them, at the outset of the contract, an arbitration service which could be used in the event of any later dispute between them.] 13.1 If the Client does not pay the Contractor when agreed, or prevents the Contractor from gaining access to the premises to carry out the Works then the Contractor must give the Client 7 days notice of his grievance. If the matter is not resolved the Contractor may then issue a dispute notice thereby commencing an arbitration If the Client believes that it has good reason to withhold money from the Contractor it must issue the Contractor with a dispute notice (commencing an 14

15 arbitration) that it intends to withhold money and how the amounts of any such monies have been calculated The agreed arbitration and dispute resolution service is Name Address Telephone Each of the Parties promises and agrees to comply with the rules of the arbitration provider detailed above. 14. TERMINATION 14.1 The Client may terminate this agreement for any reason by giving the Contractor written notice prior to the expiry of the period beginning on the date of this agreement and terminating 14 clear days after the date of this agreement. If the Client chooses to terminate this agreement under Clause 14.1, the Client shall not be liable to make any payment for any losses or expenses suffered or incurred by the Contractor as a result of the Client terminating this agreement except if Clause Unless otherwise provided in Clause 5, the Contractor shall not be obliged to commence the Works or provide any services or materials until 14 days have expired from the date of this agreement Where Clause 5 requires the Contractor to commence the Works or provide any services or materials prior to the expiry of the Permitted Termination Period, the Contractor may charge the Client for the cost to the Contractor of the following items where this agreement is terminated under Clause 14.1 so long as any items are detailed in Clause 5: (a) any services provided by the Contractor between the date of this agreement and the date of termination including without limitation the provision of licenses required for the performance of the Works; 15

16 (b) (c) (d) (e) materials or products needed in an emergency in order to permit performance of the Works in accordance with Clause 5; materials, products and/or services that are personalised and/or particular to the Works; perishable materials and/or products required for the Works; and any materials and/or products already incorporated into the land The Client may (but shall not be obliged to) terminate this agreement immediately if any of the following events happen: (a) (b) (c) (d) the Contractor being in breach of health and safety regulations; or the Contractor failing to attend the Site regularly; in each case where the Client has notified the Contractor of the above matter in writing, but the matter has not been resolved within 7 days of the date of such notice; or where it is found that that additional works are required beyond the scope of the Works agreed in Clause 4 so long as such works are not Additional Works; or the Contractor and the Client being unable to agree the scope or cost of any Additional Works or any variation The Contractor may (but shall not be obliged to) terminate this agreement immediately upon the Contractor being unable to safely access the Site for a period of two Business Days through no fault of the Contractor; 14.6 Either Party may terminate this agreement immediately if (if an individual) the other party is declared bankrupt or steps are taken to declare him bankrupt or (if a company) any of the steps in the Insolvency Act 1986 are taken with respect to it If there is a related credit agreement, cancellation of this agreement shall automatically terminate the credit agreement If either Party terminates this agreement, any rights and obligations of any Party that have accrued prior to the termination, or under any provision of this agreement which is expressly stated not to be affected by termination will remain in force Clauses 1, 13, 15 and 16 shall remain in full force after termination. 16

17 15. NOTICES 15.1 Any notice given under this agreement shall be in writing and shall be delivered by hand, sent by pre-paid first class post or recorded delivery post to the address of the Party as set out in Clauses 2 or 3 (as applicable), or to such other address notified to the other Party, or sent by to the address of the Party set out in Clauses 2 or 3 (as applicable), or to such other address notified to the other Party A notice shall be deemed to have been received: (a) (b) (c) if delivered by hand, when delivered (or if delivery is not in business hours, 9.00 am on the first Business Day following delivery); if correctly addressed and sent by pre-paid first class post or recorded delivery post, on the second Business Day after posting; and if sent by to the address of the relevant Party, at the time of transmission. 16. GENERAL 16.1 If any provision of this agreement (or part of any provision) is found by any court or other body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions shall remain in force If any invalid, unenforceable or illegal provision would be valid, enforceable and legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the Parties If the Parties want to amend this agreement, they can only do so in writing signed by or on behalf of all the Parties to this agreement Any failure or delay by a Party to enforce its rights or any remedy under this agreement shall not constitute a waiver of such right or remedy This agreement contains the whole agreement between the Parties and any other agreements, understanding or arrangements between the Parties relating to the subject matter of this agreement are cancelled and of no effect Each Party confirms that it has not entered into this agreement as a result of relying on some statement or promise of the other Party that is not contained in this agreement. This doesn t limit or exclude the liability of either party if it has acted fraudulently. 17

18 16.7 A person who is not a party to this agreement shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement This agreement may be signed by the Parties on separate pieces of paper. The signature of one Party shall not bind the other Party until both Parties have each signed and dated at least one copy of this agreement This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England Other than where an the Parties use an arbitration to resolve disputes, the Parties irrevocably agree that the courts of England shall be the only place where any dispute or claim that arises out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims) can be judged. 18

19 SCHEDULE DEFINITIONS Additional Works: additional works have arisen which could not have been reasonably foreseen by the Contractor at the time of the Quotation; Agreed Variation Schedule: the schedule to this agreement labelled Agreed Variation Schedule ; Completion: occurs when each of the Client and Contractor agrees in writing that the Works, any Permitted Variations and any Additional Works have been completed; Completion Date: the date of Completion; Confirmed Cost: the final Fixed Price of any Estimate; Result: the finished building work resulting from performance of the Works; Estimate: a ball-park figure for the cost of an item which cannot be legally binding as it is assumed to be correct based on the facts which available at the time. Total Price: The Total Price; plus (only if the Total Price given in Clause 6 is a Quotation) the agreed cost of any Additional Works); plus the cost of any Permitted Variation; plus the Confirmed Cost of any Estimate; Fixed Price: a price quoted by the Contractor which will not changed once the Works have commenced; Permitted Variation: a variation to the Works requested by the Client and agreed between the Client and Contractor and set out in an Agreed Variation Schedule; Quotation: a sum representing the final value of the Works (based on a detailed inspection by the Contractor which takes into account all foreseeable problems and works not necessarily stated, but implied by investigation of Site and the documents and drawings provided to the Contractor) which is only variable if Additional Works are encountered which can be shown to be totally 19

20 unforeseeable. Site: the land on which the Works are to be performed, the extent of which is to be agreed between the Parties and (if necessary) marked out accordingly; Start Date: the date set out in Clause 5; and Works: all the work to be carried out by the Contractor at the Site as set out in Clause 4 and any Agreed Variation Schedule. 20

21 Agreed Instalment Payment Schedule Payment of Date Or stage of Construction detailed Method of Payment Received by Contractor (Signature) Additions to the Works as shown Notes on payments Retainer withheld Retainer Paid 21 constitute legal advice in any way.

22 Agreed Variation Schedule Date Description of Variation: Effect on Cost and Project End Date(Ex VAT) A B C D E F G Labour (e.g. Electrician, Labourer) Cost of Labour (per hour) Number of Hours Total Labour Cost (B x C) Cost of Plant Cost of Materials Sub-totals of (D+E+F) Signatures Contractor Sub-total G Overhead/ Profit 30% Total net price Client constitute legal advice in any way.

23 Notes to accompany the Desired Outcome Building Contract Please read this contract and notes before you start work of any kind. Go through every page carefully with the Contractor to get a full understanding, together, of the boundaries you will both be expected to recognise and respect. constitute legal advice in any way.

24 Notes to the Desired Outcome Building Contract Before reading further, it is important to note that it is your home and therefore, your responsibility. If you are not prepared to take full responsibility for the people you employ, put a fair bit of effort into checking out the people on your short-list and be ready to pay a little more than average (insurance) to absolutely ensure a good job, then these notes are not for you. Most businesses in the UK are not worth as much as your house but the owners of the businesses still ensure that they interview every candidate for a job as well as checking their CVs and references. Picking a tradesman or builder out of the local paper at random, beating him down on price, employing him without references or a contract and hoping he does a good job at a rock bottom (VAT-less) price will, in most cases give you cause to complain about cowboy builders. This will make you part of the statistics which tell us that shoddy workmanship costs the UK in excess of 1 billion per year (Source: FMB 2009) Getting a good builder or tradesman requires some effort on your part. When you choose a car you do not simply pick the first one you see. Cars are discussed with friends, taken for test drives and placed with local garages for a 50 look over. The MOT and registration documents are checked and every effort is made to ensure the car you would like is road worthy and fit for purpose. Cars are infinitely less expensive than houses but, in the majority of cases, when employing someone to work on your home, no checks at all are carried out. In fact it is not uncommon for a tradesman to be employed after knocking on a door to tell the home owner that I am doing a roof down the road, when I noticed your chimney needed pointing. The choice is yours but if you follow the advice of DIY Doctor Home Improver Protection Solution, you shouldn't find yourself involved with cowboys. Transparency These notes should be read by the Contractor also. They describe the full intention of the contract. As well as reading these notes we strongly suggest you view our videos on: 1: How to avoid Cowboy Builders. This is a 2-part video which runs through the tradesman selection process from start to finish. By the end of this video, if you follow the instructions properly, it s pretty much impossible to end up with a cowboy. Part 1 can be seen here: Part 2 can be seen here: 2: The Desired Outcome Contract at work. Again, this is a 2-part video which interviews both the client and the builder after a 60,000 extension and refurbishment contract in South London. You can get a good idea of how easy it is to discuss this contract to make sure you both know exactly where you stand, days, weeks or months before the job starts. Part 1 can be seen here: Part 2 can be seen here: constitute legal advice in any way.

25 First and foremost, please ignore people who tell a client not to pay the contractor anything until the job is finished. This is completely the wrong way to start a relationship with a contractor, unless of course the contractor is happy to sign a contract in which he states he wants no payment until he is finished. In this case he is highly likely to ask you for bank details so he can do a credit check on you. We would also suggest that you insist on him taking some payment in stages so there can be no possible excuse for him running out of money before he finishes. There is no reason in the world for your contractor to spend any of his own money building your house and many good builders have been ripped off by customers who refuse to pay for the silliest, or fictional, reasons. This money management can be handled by a third party payment plan and many of these exist. They will arrange to handle the money for you. You will never be in a position where you have paid the contractor too much and the contractor will know that his money is available for him when he reaches an agreed stage of the works. Using an agreed payment schedule is the least expensive way of paying the builder and this contract forbids and requests for payment other than those outlined and dated in the signed contract. Ensure your payment schedule details exactly what is to be paid at which stage. The work in getting the right contractor is the client s responsibility. You are advised to do the checks above and get contractors you are sure of. This should be done long before there is any need to talk about money and materials. You should be sitting down at the table to discuss these points (using the methods discussed in the video and in the notes) with a contractor you have chosen and you already feel you can trust. Why should a good contractor have to spend his own money buying materials for your house? He may get days credit from material suppliers but will have to pay himself and his men on time. Trying to eliminate cowboy activity by not paying until the end can ensure that your contractor will rush through a job without concern for detail in order to get paid. Many people have told us they get over this by accompanying the contractor to the merchants and paying for the materials he orders. This is a poor and ill-advised solution. Good contractors have accounts at builder s merchants. They receive good discounts on the materials they order and are often happy to pass some of this discount on to you. They keep the rest to cover their time in working out quantities, ordering, pricing and unloading etc. This is very fair. If you take your contractor to the merchants, it will be you who is paying. You will get no discount because you have no account. The contractor however may be able to reclaim the discount later as it was he who arranged the sale. You can miss out big time! It is perfectly acceptable for the contractor to ask you for a deposit on the work to be done. This allows him to purchase the materials that are immediately required. He should provide a receipt for you for this money and this is fully detailed in our payment schedule in the contract. 30% of any contract fee is approximately the amount it costs, in materials, to take the building up to wall plate level. This is the top of all the masonry or timber framed work reached just before the roof trusses or roof timbers are positioned. Take a look at the payment advice below to see the best way to pay the contractor. constitute legal advice in any way.

26 You are in this together and you both want to achieve exactly the same result. A good job for a fair price. If you start the contract with mistrust it will end badly. If it actually ends! 1 in 3 home improvers get involved with cowboy builders. Of that 33%-75% have tried to cut corners by demanding cheaper and cheaper quotes and arranging cash deals with the builders. Cash deals, with no contracts, usually mean no come-back for the client when things go wrong. Choosing the right Contractor Hiring a good contractor is made a great deal easier by using a lead generation scheme. But always ensure that the contractor you would like to with has the correct insurance. Full details on how lead generation schemes work can be found here: Trades used from Lead Generation Companies should be subject to exactly the same checks by you as those chosen from other sources. A tradesman who has voluntarily purchased Public Liability Insurance is of an entirely different mindset than the cowboys. To buy insurance the tradesman is ensuring that he is protected against accidents, as are his home and his family. You also benefit from this. This means the tradesman is in his job for the long term and is not just a short-termer grabbing a few pounds here and there before trying some other form of getting easy money. Builders v Businessmen Most small businesses in the UK (not just in the building industry) start because the owner of the business was very good at what they did for their boss. They decided they could do better or earn more by going it alone so they set out on the entrepreneurial path. Most had no idea of the work involved in addition to the day to day work they expected to be involved in. They now have to do the books, provide their own works transport, arrange insurances, stationary, quotes, and ensure they are up to date with the latest Health and safety legislation. The list goes on and on. From doing the one job they are good at, they are now doing 20 jobs, but are still only good at one of them. The other jobs take up at least 40% of the time spent in any business and the simple fact is that any business that spends 40% of its time doing things that it is no good at, loses money. This is one of the main reasons (according to Chamber of Commerce figures and a BBC report in October 2010) a larger number of start-up businesses in all sectors go bankrupt in their first year. Poor planning and unrealistic order book assumptions mean that new businesses are not prepared for the difficulties of staying around. With this in mind we suggest you do not ask for quotes from any business that has not been trading for at least 1 year. Never mind the sob stories about starting somewhere. These guys are not your problem. Let them cut their teeth on someone else s house. constitute legal advice in any way.

27 A business that does not understand business will have a small hourly rate. This rate will be for wages and designed to attract the unsuspecting customer. The reality is, with a small hourly rate, the contractor cannot afford good tools, or indeed to replace tools when they break (which they do, regularly) so these guys are constantly looking for extras to supplement the low price they quoted for your job. The hourly rate for work done in your home should be discussed and agreed before the work starts. There is a form in the contract for this figure to be broken down. A tradesman should be earning between 25K and 40k per year. They should also be charging for their transport costs and overheads to include breakages etc. An hourly rate of should be expected. When you are interviewing tradesmen, a good question to ask is, what happens if your most expensive tool breaks on my job? The answer you would like to hear is, it s built into my hourly rate. If that is not the answer (or a form of it) that you get, you need to question further! References Having seen the quotes from your contractors, you must interview them again, just as you would a prospective employee. You need to ask them to show you at least two jobs they have done recently which bear a resemblance to your job (it s no good having a bathroom fitted by a guy who does patios). Ask your builder to list his last 5 jobs and you can choose 2 to go and see. If the builder cannot do this, do not use him. An often used excuse by cowboys is that they have spent the last 2/3/4/5/6 months working away and the last jobs they have done are miles away. If there is any reluctance by the contractor to show you his work, you have got the wrong contractor. Good contractors are proud of what they do and are more than happy to show other jobs. Ask for contact details and talk to the customers for whom your potential contractor did these jobs. Was their time-keeping good? Were they clean and tidy? Did they come in on budget? How did the relationship go throughout the job? Were there any problems? VAT Never use a contractor who is not VAT registered for any job over 1,000. The VAT threshold is 77,000 (March 2102) and a small extension or average refurbishment job costs around 25,000. For your contractor not to be VAT registered means he has only done small jobs in the past or he has done less than 3 big jobs this year. Good contractors are ALWAYS busy so if your contractor is not VAT registered then he is either too small to do your job, or he has not been busy. There is always the possibility that the builder will say that he limits his work so that he does not get to the VAT threshold every year. Generally these guys are a little older and have decided to take it a little easier. Ask yourself if you want to take the risk that the builder then takes forever to finish your job while he takes things a little easier. Paying cash for your job might save you 20% but it leaves you no comebacks whatsoever should there be any problems and if the person who wants to buy your house asks to see the guarantee on the work, it will constitute legal advice in any way.

28 not be valid. Furthermore it is illegal to defraud the taxman. In short there is no reason whatever why you should use a contractor who is not VAT registered. Payment: DIY Doctor strongly suggests the use of a third party payment option which will allow you to set up payment terms with your chosen contractor to which you both agree. Some Trade Associations will carry Third Party Payment plans and you can make enquiries about these through a web search of the Federation of Master Builders or the relevant trade association. DIY Doctor manage a scheme called Trusty Payment which you can use with a specially modified version of this contract: Advantages of this scheme are: You do not have to pay the contractor yourself, this is handled for you but you still remain in control. If you do have a problem and the relationship with your contractor turns sour, the third party payment plan operator will sort it out and, if necessary, add to your funds to get the job completed. When the work is complete some scheme operators provide a warranty protecting you for the next 12 months at no additional costs. Description of works This description should be as full as you can make it. Talk to the contractor and compile this list together. It should encompass every part of the work and even list individual items such as removal of existing toilet, replacing with new. Obviously (as you will read further down) the implied work involved with each operation is included in the price for the operation itself. For example when the toilet is replaced, the water will be supplied to it for flushing and the waste pipes will be connected to a suitable outlet. Your contractors will be professional builders and tradesmen. They should produce professional quotes. The quotes should be broken down (not necessarily into individually priced items) in great detail which lists every job which is included in the quote. You need to examine the quote carefully and ask questions about things that do not appear to be included. A good example is internal doors. These are often left out of quotes and the client assumes they are included. Please check. DIY Doctor has designed free pricing software called Price Doctor to enable you to price your job yourself. This will allow you to get a price before the builder quotes. Not only that but you can order a shopping list after designing your extension. This list will give you details of every nut, bolt, screw and nail required to build your extension. Discussions with the builder can then take place on a more informed basis. Tell your contractor that you would also like to me made aware of the works which are not actually detailed on the drawings, but are implied by them. There is more about this below. constitute legal advice in any way.

29 Drawings and Documents The contractor will expect to work to a set of drawings or instructions which detail the work. These drawings and instructions form part of the contract. Any alterations to them should be agreed between you and an Amendment sheet detailed and signed by both of you. All of the work to be done includes all implied work. That is work which is not specifically detailed in the documents but which, to complete the job properly to the desired outcome, needs to be included. If a door is to be replaced, the implication is that the furniture will be replaced as well unless it is specifically stated that the same furniture (hinges, locks etc.) can be reused. It is a desired outcome that the door fits well in the frame and does not rattle in the keep when a wind rushes by. The desired outcome is not just what you would expect from a contractor, but it should be what the contractor would expect of him or herself and any of their workmen. Take photographs of the job before the contractor starts and ask your contractor to take several photographs all the way through the job. You will then have a complete record of every stage of the process. Also ask the contractor to photograph anything that crops up during the day which might cause concern or which could be called Extra, or work additional to the contract fee agreed. Take photographs yourself of the progress every night and keep a full record of the work done. Photographing the work achieves many things. You will have a complete record of work done which you can refer to if you sell the property. The contractor will probably ask for a copy for his portfolio. You will understand the process of the build and a little more about how your house works and you will be reassured that everything is being done according to specifications. Good contractors are proud of their work, they will not mind in the least if you photograph the process. Photographs also give the contractor the message that you are on top of the project management and taking advantage of you is not an easy task. Completion date Your contractor will have a good idea of how long the job will take. Ask him/her to add a suitable period on for natural problems such as inclement weather, a late delivery and maybe a van breakdown. Usually a couple of weeks are plenty for this. This shows the contractor that you are flexible, but it also says that, having been flexible, there is no excuse whatever for finishing late. Ask him/her to confirm that all materials (wherever possible) will be ordered on a just-in-time basis (i.e. they do not arrive on site weeks before they are to be used) and that any materials that need to be stored will be protected at all times. constitute legal advice in any way.

30 Take into consideration possible holiday periods and agree an end date between you. If the client is not living in the property named in the contract and will incur additional costs should the contract run over the agreed finishing time the client and contractor should agree (before starting the contract) a daily fee to be paid to the client, by the contractor to compensate for this overrun. Contact Details One of the desired outcomes of this contract is to provide good communication between client and contractor. With full contact details there should be no reason why both parties cannot contact each other with regard to any problems or delays. Rules should accompany the contact arrangements. E.G. No phone calls before 8.00am and a text is not an appropriate way to communicate. Notes should be kept of all decision-making conversations and, should they change the course of the build in any way, be signed by both parties. Insurance Make absolutely sure your contractor has the appropriate Public Liability Insurance. Many homeowners wrongly believe that their standard home insurance policy will cover the risks encountered during the building of an extension. This is not generally the case. Builders Public Liability insurance is an insurance policy designed to cover their business in the event they cause bodily injury or death to a member of the public or damage to a third parties property (existing house). Contractors all risks insurance (also known as contract works) is designed to meet the requirements of builders and other contractors for a comprehensive insurance solution to protect material assets such as the works in progress, stock and equipment on site and in various locations and items of plant and tools. If a near complete extension costing 75k burns down due to a contractors mistake, can he afford to re-build at his own cost? Trade Associations If your contractor does not belong to a trade association it does not reflect badly on him. Most trade associations offer many money off incentives for their members but little in the way of support or other benefits. Many trade associations are simply not trusted by contractors because they cost a lot to join and the reference checks made are minimal. There is quite often no advantage for a contractor to belong. It does not follow that, because a contractor is a member of a trade association, he is better than one who is not. One thing some trade associations do offer is an arbitration service. This is extremely useful if there should be a falling out between client and contractor. See notes below. Usually, when this happens, the only recourse is a courtroom and lengthy, costly legal battles. So much so that the client (statistically) usually walks away from the aggravation and settles for losing a lot of money and having to spend more getting the job finished. This is also very true for contractors with customers from hell and many times contractors have been unable to finish a job because the client will not pay on time, or changes their mind about operations every 30 minutes. constitute legal advice in any way.