What's a fair builder payment schedule?

lordchoc

Hi,

We're about to have a two-storey extension on our house and need some help/advice about a fair payment schedule for the builder. The cost is considerable (£100k+ & est 13 weeks) so I want to get this right.
The builder we've chosen has suggested the following:
5% deposit
10% week 1
10% week 3
20% week 5
20% week 7
15% week 9
10% week 11
5% week 13
5% completion

I'd like a larger percentage for completion (so that there is some urgency to complete and sort out any snags). But what's reasonable to ask for? 10%, 20%?
And if the percentage is larger for completion, which other payment(s) would be reduced?

Thanks in advance.

Furts

It is your choice, and I respect this. I would never entertain a schedule anything like yours - the concept is scary.

I would be after stage payments and no money up front.

It is down to negotiation and trust...but along the lines of materials on site to start the works and at the end of week1 you will get...

At demolition and site clearance you get...

At oversite complete you get...

Then work through the job. At all stages payment is clearly understood to be subject to quality. A retention at the end to cover problems and remember if you pay weekly as suggested what happens if labour does not turn up? Your payments are not linked to production so a risky scenario.

I also worry about your programme. 13 weeks for £100K represents £400K annual turnover, and at this level you could, or should, be budgeting for independent, professional help. Without this you run the risk of being inundated with stress and problems, unless your preparation is 100% spot on. I sense this may not be so based on your post, but over to you here.

Hope this helps.

brightontraveller

lordchoc wrote: »

Hi,

We're about to have a two-storey extension on our house and need some help/advice about a fair payment schedule for the builder. The cost is considerable (£100k+ & est 13 weeks) so I want to get this right.
The builder we've chosen has suggested the following:
5% deposit
10% week 1
10% week 3
20% week 5
20% week 7
15% week 9
10% week 11
5% week 13
5% completion

I'd like a larger percentage for completion (so that there is some urgency to complete and sort out any snags). But what's reasonable to ask for? 10%, 20%?
And if the percentage is larger for completion, which other payment(s) would be reduced?

Thanks in advance.

Weeks are irrelevant in respect of payment alone schedule? Go to site do nothing for ten weeks you ‘d owe all the monies?

Minimum do it on stages e.g footings /groundwork's in payment x brickwork's x floors x roof x etc Most would also have it inclusive of a time scale e.g. week one footing/grounds works ( started /completed ) payment x, week two brickwork's etc this helps keep the build schedule, highlight under performance of certain trades, shows up problem areas, assist in planning scheduling for other trades , generally keeps build cost down,

I'd look at using COW or alike ? If you can get a fixed price and time contract but chances are slim on that ? And as far as possible snag as you go at least once a week if your a novice ? No point in getting 13 weeks in to say doors in wrong place ? Also there is more incentive at start to keep client happy than at finish lol

lordchoc

brightontraveller wrote: »

Weeks are irrelevant in respect of payment alone schedule? Go to site do nothing for ten weeks you ‘d owe all the monies?

Minimum do it on stages e.g footings /groundwork's in payment x brickwork's x floors x roof x etc Most would also have it inclusive of a time scale e.g. week one footing/grounds works ( started /completed ) payment x, week two brickwork's etc this helps keep the build schedule, highlight under performance of certain trades, shows up problem areas, assist in planning scheduling for other trades , generally keeps build cost down,

I'd look at using COW or alike ? If you can get a fixed price and time contract but chances are slim on that ? And as far as possible snag as you go at least once a week if your a novice ? No point in getting 13 weeks in to say doors in wrong place ? Also there is more incentive at start to keep client happy than at finish lol

Thanks. I already plan to get the builder to link the 'weeks' to work completed. And as I say, there isn't enough toward the end of the project. As you say, it currently favours keeping me (the client) happy early on.
So, what does a fair schedule look like? How much should be weighted to the final payment (assuming the rest is linked to work completed at a certain time point)?
Also, what is COW?

martinthebandit

If the builder comes to you well recommended and is a small firm and you can link those weeks to targets achieved then I wouldn't have a problem with it.

If one or more of the above doesn't apply then I would be looking for a different builder.

brightontraveller

lordchoc wrote: »

Thanks. I already plan to get the builder to link the 'weeks' to work completed. And as I say, there isn't enough toward the end of the project. As you say, it currently favours keeping me (the client) happy early on.
So, what does a fair schedule look like? How much should be weighted to the final payment (assuming the rest is linked to work completed at a certain time point)?
Also, what is COW?

Clerk of works http://www.icwgb.org/page/default.asp?title=Welcome%20to%20ICWCI&pid=1

Get one independent of firm doing works, architect etc for obvious reasons?
A good one should save you time, money and headaches ensure trades are doing it correctly they can also argue it out with building control , builders, architect, trades etc over if something’s safe correctly done etc more effectively than you can 99% of the time then you only really have to worry about finishes, colours of rooms etc

% of payment at end is direct correlation of works before? Hence the good CoW, 5% maybe fine but 50% may not cover all the f ups its tricky you need a level the builders will except that’s also favorable to yourself which is why I’d suggest more snagging throughout works than at the end.

It can be a pain to start but once builder knows what client wants when it comes to next room/ stage etc they should be able to have rectified errors /difference so list is smaller with goal ultimately there is nothing to put right in subsequent rooms / stages making it known at the start what standard you’ll expect, except whilst the incentive is there than at the end when incentive is no longer there is a much better method...

Furts

If you name the location you are building in then this Forum may be able to guide you on a Clerk Of Works.

Of course there will be costs involved in engaging one, but this should be budgeted into your works, and you should have a healthy contingency on a 13 week job of £100K valuation.

teneighty

lordchoc wrote: »

Thanks. I already plan to get the builder to link the 'weeks' to work completed.

That is not what you posted, it states percentages. That is a very unwise way to proceed.

Normal practice is to make payments every 4 weeks.

A valuation is prepared to work out the value of work completed. Previous payments and a 5% retention are deducted from that figure and the necessary payment made including VAT. That way you have only ever paid for work completed with little danger of the contractor doing a runner with too much money paid up front.

I've never known a Clerk of Works make valuations and certify payment. More likely to be the "architect" or the Quantity Surveyor.

brightontraveller

teneighty wrote: »

I've never known a Clerk of Works make valuations and certify payment. More likely to be the "architect" or the Quantity Surveyor.

Not seen any post say they do? But they certainly can but that's up to client and CoW, I'm not talking about a non independent bs Cow e.g. employed /appointed by architect /contractor but an independent one, I know who'd I put my money on to know the cost times etc given the choice architect ,contractor , qs etc but irrelevant in that respect as contracts costs etc have already been agreed this is more down to making sure its done correctly etc