There are several caveats when it comes to contracts, and no one knows this better than my Project Manager, Tom Gillett. Being as highly experienced as he is in the field of property, Tom can offer his expert advice to any aspiring developer in need. You are bound to pick up tips and tricks no matter what property-based subject you throw at him.
In property, the right contract depends on the size and type of site and the type of building contractors you are looking to use. So, when it comes to contracts, here are Tom’s Top 5 Tips to remember?
Tip #1 – Do not assume the value of the development based on the contract
Instead, look at the risks associated with it. Where is it based? If it is on the high street, there will be restrictions. The hours of operation may be significantly reduced, it may be heavily populated, and you will most likely have party wall issues as well. If the building is listed, there will be additional considerations.
On the other hand, if it is in a field – with a floor, four walls, and a roof – the risk will be less than a site situated on the high street. In these instances, you will generally have more freedom and will most likely not be tied down by the likes of neighbouring buildings and smaller hours of work time.
In a development, there are many facets that have to be considered when choosing the contract. Take into account everything and then decide if it is worth it or not.
Tip #2 – Consider using a Joint Contracts Tribunal (JCT) contract
The JCT suite of contracts are usually recognised as the industry standards, says Tom. He highly recommends them for commercial builds as they are reliable. These contracts are made up of ‘families’ of standard forms, guidance and other documents suitable for most projects.
They come in three forms: minor, intermediate and major. Whatever your building may be in terms of complexity, each of these three should be good enough to use. If any professional builder does not utilise one of these contracts, think twice about partnering with them.
Tip #3 – Always check the contract when problems arise
Let us say that the job is late or over budget – maybe it is not up to the high-quality standards needed. Whatever it may be, go straight to the contract and check to see what the builder’s terms and conditions are. You may have to cover the costs following this as a result.
In my client’s site based in Hampshire, we have had problems arise with the contingency budget but not necessarily the builders. Either way, having a JCT contract or something similar in place is vitally helpful in clearly explaining what happens should one of these scenarios occur.
Tip #4 – Make sure that the contract is fair for all parties involved
Contracts are supposed to work in everyone’s favour. If the builders are not getting a good deal out of the proposals, they will not want to work for you. If you are not getting a good deal out of the proposals, then you will not want to pay the builders in the first place.
Finding the right balance is critical. Should you want additional time on the project, which will enlist the services of the builders, then include that in there so long as they oblige. Tom is adamant that people should utilise these contracts to their fullest extent to ensure a smooth process.
Tip #5 – For commercial-to-residential schemes, utilise multiple contracts
Lastly, and the most simple of tips – make sure everything is covered with contracts when it comes to large scale developments. Having detailed contracts that go over every aspect will help cover your back and the backs of those involved with the project.
Imagine if something were to go seriously wrong. The entire development could be jeopardised, and you will be left out of pocket. Don’t let this happen to you, as the fallout can be catastrophic.
We have a large, 30,000 square foot commercial-to-residential conversion at our Hampshire site, one of the largest being documented in the UK. If anything were to happen that was not covered by a contract, we would be in serious trouble. Do your due diligence and be careful.