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[Misc] Wild variation in building quotes



M

Mike Small

Well-known member
Dec 26, 2008
2,734
Weststander said:
With such a large sum involved and the contractor holding all the knowledge, can a QS or a knowledgeable architect be engaged by you to advise?

Have you covered all bases in your spec, right down to the number and type of sockets and light pendants? Omissions, vagaries and later changes of mind, will cost you heavily in “variations” at the end.
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A QS helped to generate the initial £180k quote for the renovation firm (not builders)! The quote was inflated from the cut the renovation firm get but also the pricing of this surveyor. 2 out of the 3 quotes we received covered the specs right down to the number of sockets but not the one we’re going with as it goes. Realise this sounds naive but we will get the number of sockets we need for each room I feel. The Directors approach is how many sockets would I need, what carpet would I want in his house...
 




M

Mike Small

Well-known member
Dec 26, 2008
2,734
Justice said:
If the vat is included the profit probably stands at £30k 30% leaving 70k to do the job sounds about right but of course haven’t seen the spec.
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Yes VAT is included. Full rewire and electrics, completely new plumbing system and boiler, knocking down internal wall, stripping back and replastering whole house, new guttering, carpets, fixing floor boards, wall tie, fixing chimney and roof then the labour with fitting the kitchen and bathroom. This is what we were quoted for (£80k). We are are ordering the kitchen, bathroom and windows separately of the builder and this comes to £125k.
 


Weststander

Weststander

Well-known member
NSC Patron
Aug 25, 2011
64,331
Withdean area
Mike Small said:
A QS helped to generate the initial £180k quote for the renovation firm (not builders)! The quote was inflated from the cut the renovation firm get but also the pricing of this surveyor. 2 out of the 3 quotes we received covered the specs right down to the number of sockets but not the one we’re going with as it goes. Realise this sounds naive but we will get the number of sockets we need for each room I feel. The Directors approach is how many sockets would I need, what carpet would I want in his house...
Click to expand...

When someone else pointed out the £125k would include VAT, £104k for the amount of work you outlined doesn’t seem unreasonable (said from afar).

Although sockets and lights might sound trivial, it’s just one illustration of how when a client starts mucking around mid job eg we now want the sockets located there, “variations” when added up can lead to a nasty £ surprise at the end.

Two other things:

Good idea to get genuinely independent references for the contractor you plan to choose.

Cash flow, check the payment plan. There’s absolutely no need to pay upfront in stages, it should be the opposite of paying as regular milestones are achieved. They have trade accounts with suppliers so pay in arrears, if they don’t alarms bell should ring that they’re a bad credit risk. Obviously they need to pay staff and subbies, which your stage payments will help finance.

The one exception is where you require specialist items such skylights or features of your choosing, some bifold door firms require payment in full beforehand. That’s legit.

In general, if your potential contractor gives you speal about paying them upfront, that’s not right. They may be wide boys or they’re in trouble so that you’re in effect financing the subbies and materials on the job before yours.

You want them to be motivated to complete stages to your satisfaction, to get your money.
 


M

Mike Small

Well-known member
Dec 26, 2008
2,734
Weststander said:
When someone else pointed out the £125k would include VAT, £104k for the amount of work you outlined doesn’t seem unreasonable (said from afar).

Although sockets and lights might sound trivial, it’s just one illustration of how when a client starts mucking around mid job eg we now want the sockets located there, “variations” when added up can lead to a nasty £ surprise at the end.

Two other things:

Good idea to get genuinely independent references for the contractor you plan to choose.

Cash flow, check the payment plan. There’s absolutely no need to pay upfront in stages, it should be the opposite of paying as regular milestones are achieved. They have trade accounts with suppliers so pay in arrears, if they don’t alarms bell should ring that they’re a bad credit risk. Obviously they need to pay staff and subbies, which your stage payments will help finance.

The one exception is where you require specialist items such skylights or features of your choosing, some bifold door firms require payment in full beforehand. That’s legit.

In general, if your potential contractor gives you speal about paying them upfront, that’s not right. They may be wide boys or they’re in trouble so that you’re in effect financing the subbies and materials on the job before yours.

You want them to be motivated to complete stages to your satisfaction, to get your money.
Click to expand...

Thanks for the advice. On our first meeting he told us a lot about the work he had/was doing and gave us their addresses to have a look. Perhaps foolishly we haven’t done this. In terms of payment again we haven’t agreed anything in writing but from speaking to his secretary it’s in 25% chunks along the project with at least 25% after completion. Not too concerned but again feel we’ve been a bit too trusting. We’re just want to get in! He’s a pretty big but local renovation firm with his own team of trades (not windows) so that’s reassuring. Will clarify the payment terms!
 


Goldstone1976

Goldstone1976

We Got Calde in!!
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Apr 30, 2013
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Herts
Update to OP: I went with the second highest quote, and blow me down, but isn’t he the perfect builder/general contractor. Communication is outstanding, turns up when he says he will, arranges the various trades completely seamlessly, even does little extras chucked in for free. Genuinely impressed so far - about 1/3 through the project. There’s a pause coming up for the lift people to come - now they are shockingly poor at communication. It wouldn’t surprise me if they simply don’t show.
 




Weststander

Weststander

Well-known member
NSC Patron
Aug 25, 2011
64,331
Withdean area
Goldstone1976 said:
Update to OP: I went with the second highest quote, and blow me down, but isn’t he the perfect builder/general contractor. Communication is outstanding, turns up when he says he will, arranges the various trades completely seamlessly, even does little extras chucked in for free. Genuinely impressed so far - about 1/3 through the project. There’s a pause coming up for the lift people to come - now they are shockingly poor at communication. It wouldn’t surprise me if they simply don’t show.
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What type of lift, out of interest? (Sorry if you’ve already said in the thread).
 










Justice

Justice

Dangerous Idiot
Jun 21, 2012
18,841
Born In Shoreham
Weststander said:
When someone else pointed out the £125k would include VAT, £104k for the amount of work you outlined doesn’t seem unreasonable (said from afar).

Although sockets and lights might sound trivial, it’s just one illustration of how when a client starts mucking around mid job eg we now want the sockets located there, “variations” when added up can lead to a nasty £ surprise at the end.

Two other things:

Good idea to get genuinely independent references for the contractor you plan to choose.

Cash flow, check the payment plan. There’s absolutely no need to pay upfront in stages, it should be the opposite of paying as regular milestones are achieved. They have trade accounts with suppliers so pay in arrears, if they don’t alarms bell should ring that they’re a bad credit risk. Obviously they need to pay staff and subbies, which your stage payments will help finance.

The one exception is where you require specialist items such skylights or features of your choosing, some bifold door firms require payment in full beforehand. That’s legit.

In general, if your potential contractor gives you speal about paying them upfront, that’s not right. They may be wide boys or they’re in trouble so that you’re in effect financing the subbies and materials on the job before yours.

You want them to be motivated to complete stages to your satisfaction, to get your money.
Click to expand...
Disagree about your last sentence I always ask for a material deposit on larger jobs, I’m not a bank and not prepared to offer interest free credit. If a customer isn’t willing to stump up a deposit alarm bells ring and I’m walking.
 


Weststander

Weststander

Well-known member
NSC Patron
Aug 25, 2011
64,331
Withdean area
Justice said:
Disagree about your last sentence I always ask for a material deposit on larger jobs, I’m not a bank and not prepared to offer interest free credit. If a customer isn’t willing to stump up a deposit alarm bells ring and I’m walking.
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My family are builders of three generations, I’ve handled the accounts for countless large and tiny construction and general builder businesses. They’ve never requested deposits.

The reasons:
1. Suppliers are paid later, due to credit accounts with merchants.
2. Subcontractors and employees are never paid before a brick had been laid.

The only exception is where a specialist supplier such as a skylights or bifold doors manufacturer require a hefty deposit or full payment in advance.
 




R

Rowdey

Well-known member
Jul 7, 2003
2,537
Herne Hill
Justice said:
Disagree about your last sentence I always ask for a material deposit on larger jobs, I’m not a bank and not prepared to offer interest free credit. If a customer isn’t willing to stump up a deposit alarm bells ring and I’m walking.
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Agree - the deposit is two fold - to book time out with me, and make sure you are as financially and morally committed as i am.. and there’s no way i’m putting a boiler on the wall without a payment towards it.. once up, it ain’t coming back off even if i wanted it too.
 


Justice

Justice

Dangerous Idiot
Jun 21, 2012
18,841
Born In Shoreham
Weststander said:
My family are builders of three generations, I’ve handled the accounts for countless large and tiny construction and general builder businesses. They’ve never requested deposits.

The reasons:
1. Suppliers are paid later, due to credit accounts with merchants.
2. Subcontractors and employees are never paid before a brick had been laid.

The only exception is where a specialist supplier such as a skylights or bifold doors manufacturer require a hefty deposit or full payment in advance.
Click to expand...
Regardless if I have a credit account or not it’s for my benefit not the customers. I still have to pay if the customer decides to piss me about and I can’t take that risk.
 






Goldstone1976

Goldstone1976

We Got Calde in!!
Helpful Moderator
NSC Patron
Apr 30, 2013
13,801
Herts
I agreed 5% deposit up front, then 6 equal instalments payable on completion of recognisable work packages, eg all building, all plumbing, all electrical, all decorating etc.

He gets the modest cash flow advantage at the start of each package; I get the knowledge that for the majority of each package I’m ahead. Both parties are happy.

I’ve been expecting a request for payment for work package 2 for a fortnight now. I’ve reminded him twice, but not seen it yet. He and a plumber and a chippy are here today, and he says that there’ll be 4 tomorrow.

I’ll take them tea and cake in an hour or so.
 


M

Mike Small

Well-known member
Dec 26, 2008
2,734
Just wanted to ask some advice regarding payment if anyone knows anything or has any opinions!

The building director has said that I would be able to pay his tradesmen (electrician, plumber, plasterer, carpenter etc) in cash which would save money in VAT. Now I don't think we're going to do this but wanted to ask people's take on it. Does this make me a tax dodger or is it quite a done thing? The rest of the payment is to the company's account which will be used to buy materials etc so that will all include VAT as they're VAT registered. His trades are all in house. Any thoughts appreciated.
 


Bold Seagull

Bold Seagull

strong and stable with me, or...
Mar 18, 2010
29,836
Hove
Justice said:
Disagree about your last sentence I always ask for a material deposit on larger jobs, I’m not a bank and not prepared to offer interest free credit. If a customer isn’t willing to stump up a deposit alarm bells ring and I’m walking.
Click to expand...

Do you pay all your subcontractors up front?
 


Goldstone1976

Goldstone1976

We Got Calde in!!
Helpful Moderator
NSC Patron
Apr 30, 2013
13,801
Herts
Mike Small said:
Just wanted to ask some advice regarding payment if anyone knows anything or has any opinions!

The building director has said that I would be able to pay his tradesmen (electrician, plumber, plasterer, carpenter etc) in cash which would save money in VAT. Now I don't think we're going to do this but wanted to ask people's take on it. Does this make me a tax dodger or is it quite a done thing? The rest of the payment is to the company's account which will be used to buy materials etc so that will all include VAT as they're VAT registered. His trades are all in house. Any thoughts appreciated.
Click to expand...

Yes, it makes you a tax dodger and is illegal. Yes, it’s pretty commonly done. Yes, you’ll save 20% on everything done that way. Your call.
 








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