Building contracts

ryder72

We are about to commence on a major building project shortly and have identified the building firm. They have offered us the option of using their own contract which is quite comprehensive or a JCT contract. The latter is quite simple in its structure and contents. We are not sure which one to use. On the one hand JCT I believe are preferred contracts but by being quite vague, I am not sure if they are any good.

Any thoughts on this?

jk0

Someone tried to get me to use the JCT contract a few years ago, but I was unhappy with it.

(The retention was less than the cost of the scaffolding, so there would have been no incentive at all for works to be remedied.)

If you are happy with the firm's contract go for it. However, you have to keep builders 'hungry'. I know that sounds an awful expression but it's the best I can come up with.

In other words, when paying stage payments you have to always consider they might walk off the job, and keep back enough cash for you to employ a different builder to finish the job. Thus you never pay them 100% for anything, only 90%, so that they have an incentive to finish the whole job.

FTA: I bet some builder comes along now to contradict me.

teneighty

JCT do several contracts from small homeowner contracts up to multi-million pound developments. I assume you are referring to the basic homeowner contract. Personally I find it too basic but if you are not familiar with building contracts the next step up, Minor Works, will probably be too complicated.

What contract is the builder offering? Is it the Federation of Master Builders contract or something they have written themselves? The former should be OK the latter probably not.

teneighty

If you impose a 10% retention any decent builder will not bother to price the job and any dodgy builder will just inflate their quote by 10% to cover themselves.

If you need more than 5% you are not running the contract properly.

Furts

JCT has been around for generations so people are conversant with the various contracts, and if things turn nasty there will be folks that can help.

"Major building project" with a bespoke contract written by the contractor does sound concerning. This could be written with terms favourable to the builder - it is up to you to scrutinise this.

A simple question is why does the builder believe the contract is superior to JCT, if indeed it is.

jk0

teneighty wrote: »

If you impose a 10% retention any decent builder will not bother to price the job and any dodgy builder will just inflate their quote by 10% to cover themselves.

If you need more than 5% you are not running the contract properly.

Oh, I don't tell them about the 10% until after they have quoted. Like you, they always argue about this, saying it's not fair not to be paid when they have done the work. I point out that they will presumably be making more than 10% profit, so they will not be out of pocket. Just they have to wait to the end to get all their profit.

martinthebandit

jk0 wrote: »

Oh, I don't tell them about the 10% until after they have quoted. Like you, they always argue about this, saying it's not fair not to be paid when they have done the work. I point out that they will presumably be making more than 10% profit, so they will not be out of pocket. Just they have to wait to the end to get all their profit.

Bet you never get the same decent builder back for a second job.

Bad builders always work for bad customers.

jk0

martinthebandit wrote: »

Bet you never get the same decent builder back for a second job.

Bad builders always work for bad customers.

I've yet to meet a decent builder.

Doozergirl

teneighty wrote: »

If you impose a 10% retention any decent builder will not bother to price the job and any dodgy builder will just inflate their quote by 10% to cover themselves.

If you need more than 5% you are not running the contract properly.

I agree. The 5% is for snagging, not for paying other builders. Keeping a builder is about managing the relationship well, not tying them up in the contract and unfair retentions. The builder would have to be making big margins to cope with a 10% retention through a major project. They might be big numbers but most of it goes straight out in bills for the job. The builder has to eat as well as manage overheads.

I also thing that anyone prepared to work with a contract, JCT or not, is the sort of builder prepared to finish a job. They don't need 'incentive'. I find that insulting. I don't see other people having large proportions of their salaries held back as an incentive to work, in fact, I think/know it would do quite the opposite.

A client's idea of 'incentive', in my experience, is not treating the builder with the same trust that they place with you. And that does not create the right foundation. You may have had a bad builder, but if you treat a good one like a bad one, you'll end up with problems again.

5% is written into respected contracts for a reason. It is fair.

jk0

Doozergirl wrote: »

I agree. The 5% is for snagging, not for paying other builders. Keeping a builder is about managing relationships, not tying them up in the contract and unfair retentions. The builder would have to be making big margins to cope with a 10% retention through a major project. They might be big numbers but most of it goes straight out in bills for the job. The builder has to eat as well as manage overheads.

I also thing that anyone prepared to work with a contract, JCT or not, is the sort of builder prepared to finish a job. They don't need 'incentive'. I find that insulting. I don't see other people having their salaries held back as an incentive to work, in fact, I think it would do the opposite.

A client's idea of incentive, in my experience, is not treating the builder with the same trust that they place with you. And that does not create the right foundation.

5% is written into respected contracts for a reason. It is fair.

Hmm, well I did say I expected builders to contradict me, didn't I?

Doozergirl

jk0 wrote: »

Hmm, well I did say I expected builders to contradict me, didn't I?

Ah, but I've had lots of lovely clients.

And you've not met a good builder, which makes us builders right when we say that you will encounter problems for yourself.

I've had bad clients. And it isn't the quality of us and our work that changes from job to job. It's the clients.