Paying a builder
Discussion
Just wanted to check this is fairly standard practice:
We have an initial estimate/quote that was pretty detailed in what exactly would be done and the cost (although this was quite a few months ago).
Builder has been onsite a couple of weeks and is requesting first stage payment which is about 20% of the full amount - fair enough.
Should he give us a breakdown of what it's for? Initially I thought so but then I starting thinking that rather than having paid for certain things we are paying a percentage which seems reasonable.
Does that sound right?
We have an initial estimate/quote that was pretty detailed in what exactly would be done and the cost (although this was quite a few months ago).
Builder has been onsite a couple of weeks and is requesting first stage payment which is about 20% of the full amount - fair enough.
Should he give us a breakdown of what it's for? Initially I thought so but then I starting thinking that rather than having paid for certain things we are paying a percentage which seems reasonable.
Does that sound right?
Pretty standard practice although the quote should have said what stage payments were expected.
Otherwise you could argue that it's payment on completion. But in that case, expect a grumpy builder inserting a prop where the sun don't shine!
A couple of stage payments is not unreasonable but ideally should be at defined points. eg. 20% once the walls have been built etc. And the stage payments shouldn't get to the point where the builder's had say 80% of the money but only done 60% of the work or you'll find they start taking time out on other projects. There should always be an incentive for him to get the job finished on time - either by way of not going overboard on stage payments or via a completion bonus.
Otherwise you could argue that it's payment on completion. But in that case, expect a grumpy builder inserting a prop where the sun don't shine!
A couple of stage payments is not unreasonable but ideally should be at defined points. eg. 20% once the walls have been built etc. And the stage payments shouldn't get to the point where the builder's had say 80% of the money but only done 60% of the work or you'll find they start taking time out on other projects. There should always be an incentive for him to get the job finished on time - either by way of not going overboard on stage payments or via a completion bonus.
It's not unreasonable or unusual to pay stage-payments as the work proceeds. That is certainly how large building contracts operate.
Payment on completion would be very unusual for works of any size. After all would you want to be at risk (or have your working capital depleted) by say, £50K for an extension?
But again, what did you sign up to?
Payment on completion would be very unusual for works of any size. After all would you want to be at risk (or have your working capital depleted) by say, £50K for an extension?
But again, what did you sign up to?
I would suggest you site down with builder now and ask him what the stage payments are and how much is required at each stage , that should really have been agreed at the start , for the protection of both parties.
The stages need to be linked to progress on site , ie dpc , wall plate , weathertight etc and not related to the passing of time , ie every 2 weeks.
The stages need to be linked to progress on site , ie dpc , wall plate , weathertight etc and not related to the passing of time , ie every 2 weeks.
NiceCupOfTea said:
We have a verbal agreement regarding staged payments. I'm happy with paying in stages, just wondered if there should be a breakdown. Thinking about it now it seems odd to suggest that really!
Verbal is no good, it's far too easy for people to forget or misunderstand. I'd also keep a "small" portion back, for snagging and job completion.. Obviously they will need to purchase materials and pay labour and so on...eps said:
NiceCupOfTea said:
We have a verbal agreement regarding staged payments. I'm happy with paying in stages, just wondered if there should be a breakdown. Thinking about it now it seems odd to suggest that really!
Verbal is no good, it's far too easy for people to forget or misunderstand. I'd also keep a "small" portion back, for snagging and job completion.. Obviously they will need to purchase materials and pay labour and so on...I understand that written is better, but it's a compromise between peace of mind and keeping the good relationship/trust going. If I start asking him for breakdowns and written statements of everything he's going to get fed up and think I don't trust him - and he is only a one man outfit and time spent on paperwork is time off the job...
NiceCupOfTea said:
Just wanted to check this is fairly standard practice:
We have an initial estimate/quote that was pretty detailed in what exactly would be done and the cost (although this was quite a few months ago).
Builder has been onsite a couple of weeks and is requesting first stage payment which is about 20% of the full amount - fair enough.
Should he give us a breakdown of what it's for? Initially I thought so but then I starting thinking that rather than having paid for certain things we are paying a percentage which seems reasonable.
Does that sound right?
If you negotiated a lump sum price i.e. Do all the work XYZ for £20,000 then yes, it's fair enough that he doesn't offer you a breakdown. We have an initial estimate/quote that was pretty detailed in what exactly would be done and the cost (although this was quite a few months ago).
Builder has been onsite a couple of weeks and is requesting first stage payment which is about 20% of the full amount - fair enough.
Should he give us a breakdown of what it's for? Initially I thought so but then I starting thinking that rather than having paid for certain things we are paying a percentage which seems reasonable.
Does that sound right?
When he's working on variations to the original workscope he should show that as separate items on his invoice.
Consider retention too, that's where you keep back 10% of all payments until, say, a month or 2 after he's complete to make sure that snagging etc is all done to your satisfaction.
It's pretty standard although he may not like it...
Alternatively, just take a couple of grand off his last invoice (when he's finished his work so can't down tools and desert your site) and tell him he'll get it when you're happy with the work and everything's finished to your satisfaction.
It's pretty standard although he may not like it...
Alternatively, just take a couple of grand off his last invoice (when he's finished his work so can't down tools and desert your site) and tell him he'll get it when you're happy with the work and everything's finished to your satisfaction.
Busamav said:
Its a bit late to talk about retentions unless it was agreed before works started .
Messing with the payments is an excellent way to have your builder clear site .
Hence my alternative suggestion just to keep a couple of grand back until after he's finished and OP is happy with work. This money can be used as a carrot on a stick to get the builder to get things finished.Messing with the payments is an excellent way to have your builder clear site .
The OP has no construction contract (just a quote/acceptance I assume) and no formal terms for payment agreed up front.
NiceCupOfTea said:
eps said:
NiceCupOfTea said:
We have a verbal agreement regarding staged payments. I'm happy with paying in stages, just wondered if there should be a breakdown. Thinking about it now it seems odd to suggest that really!
Verbal is no good, it's far too easy for people to forget or misunderstand. I'd also keep a "small" portion back, for snagging and job completion.. Obviously they will need to purchase materials and pay labour and so on...I understand that written is better, but it's a compromise between peace of mind and keeping the good relationship/trust going. If I start asking him for breakdowns and written statements of everything he's going to get fed up and think I don't trust him - and he is only a one man outfit and time spent on paperwork is time off the job...
I'm a General Builder, so these are my thoughts:
I negotiate all the stage payments with my customer prior to the job commencing. As the job progresses, I invoice on satisfactory completion of a phase of the build. Foundations, Wall, Roof etc.
The final stage payment is due on satisfactory completion of the entire project so, in theory, nothing else is outstanding. Most customers are happy to pay me in full, with no retention, at this stage especially as I have usually built up a good relationship with the customer.
I have only ever had one, slightly wary! customer ever ask to hold back a retention. This was around £700 on a £22k project, so around 3%, but only for 2 weeks, just in case any teething issues appear after I've gone. They didn't, and I collected my retention.
If any of my customers do have any issues with my work, I always go back quickly and rectify the work, retention or not
I negotiate all the stage payments with my customer prior to the job commencing. As the job progresses, I invoice on satisfactory completion of a phase of the build. Foundations, Wall, Roof etc.
The final stage payment is due on satisfactory completion of the entire project so, in theory, nothing else is outstanding. Most customers are happy to pay me in full, with no retention, at this stage especially as I have usually built up a good relationship with the customer.
I have only ever had one, slightly wary! customer ever ask to hold back a retention. This was around £700 on a £22k project, so around 3%, but only for 2 weeks, just in case any teething issues appear after I've gone. They didn't, and I collected my retention.
If any of my customers do have any issues with my work, I always go back quickly and rectify the work, retention or not
-Pete- said:
Does anyone know what the normal retention percentage is?
I've been given a quote with 2.5% retention, sounds too low to keep the builder interested if we have any problems. Are there any guidelines or a code of practice I can refer them to?
Thanks.
2.5% is the norm. Hold back 5% on each stage payment. When the job is finished release 2.5%. Release the other 2.5% after six months when a snagging list has been attended to.I've been given a quote with 2.5% retention, sounds too low to keep the builder interested if we have any problems. Are there any guidelines or a code of practice I can refer them to?
Thanks.
Make sure that you have a proper contract in place then if there is a problem you can resolve it accordingly through arbitration.
eps said:
NiceCupOfTea said:
We have a verbal agreement regarding staged payments. I'm happy with paying in stages, just wondered if there should be a breakdown. Thinking about it now it seems odd to suggest that really!
Verbal is no good, it's far too easy for people to forget or misunderstand. I'd also keep a "small" portion back, for snagging and job completion.. Obviously they will need to purchase materials and pay labour and so on...Far better to tattoo it on his arse from the beginning rather than him come and tattoo it on your arse when the grey areas come later on.. and they will
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