This is “one of those” areas of the project for many people (including me!). – The parts of the project that we HAVE to do, but we’d much rather be getting on with the Planning and Building work.

People, who think about taking on one of these projects, tend to be of a fairly “practical” nature. - The sort of people who want to physically “get stuck in” to creating something that they can see, use, and appreciate rather than sitting at a desk.

Ok, - Sometimes they can also enjoy sitting at a desk! – There are a lot of Lawyers / Accountants / Doctors and office based workers who do become Self Builders, and do enjoy doing paperwork or working with figures. But in general we all want to start to see our projects “appearing” in front of our eyes as soon as we can, and sitting down in front of a computer, keeping records and doing “sums” is not making that happen!

So, for those who want to be out on site all the time, “financial record keeping” can become a neglected part of the project.

The bad news is that not keeping up to date with the financial paperwork could cost you a lot of money. – It could also land you in trouble further down the road, and at the worst extreme, it could stop your project from being completed.

Often a delivery comes “incomplete”. – The supplier didn’t have the full amount of what you ordered in stock, but they only find out when they are “loading up” the delivery wagon. – The guys in the stock yard make a note of the delivery ticket , for example: “One pack of bricks to follow”. – Now, if they remember to send that extra pack that’s good, BUT sometimes the process can be flawed and the extra pack never gets delivered. BUT the paperwork goes through to invoicing, - they either “miss” the handwritten note on it or assume that the extra bricks have now gone, and charge for the full amount.

If you are talking about a pack of bricks, you could be talking of around 500 bricks. If they cost £400 / 1000, you could easily lose out to the tune of around £200 on the one order.

If that were to happen a number of times during the project you could end up losing a lot of money. – Keeping those delivery notes allows you to “reconcile” them with the invoices. (– You should also physically check the quantities in each delivery where possible to make sure that the lads in the yard have not miscounted when they are loading).

I honestly don’t think I have ever come across a Self Build, Renovation or Conversion project which has managed to get the “cash flow” right!

Pretty much every project has problems, either to a lesser or to a greater extent. – Many of these problems are caused by not keeping an eye on how much is being spent, and then not taking the necessary action EARLY ENOUGH to make sure that funding is “coming through” to make sure that everything can run smoothly.

Doing a daily, or at least weekly  reconciliation of how “much has been spent”, “how much is left” and “how much you are going to need in the next few weeks” allows you to make sure you contact your mortgage provider in good time to make sure that the money is on its way to your bank account to be there when it is needed. – If the money isn’t there to go and buy “stuff” then you could lose time. – If you lose time you may need to postpone some of the work. – If you postpone the work you may lose the sub contractor to another job and then end up losing even more time!

The VAT refund forms are not simple to complete and require a lot of “input” and “calculation”. - There are also some “grey areas” in the project with regards to what you can and can’t reclaim VAT on, which someone with “experience and knowledge” of the subject may be able to guide you through.

One thing you can pretty much guarantee during any building contract, large or small, is that there will be dispute about the amount of money you owe someone.

Initially, when you are at the “Planning” stage, you should ask for written “Estimates” or “Quotes” for each section of the work, from everyone, whether they are  supplying labour, materials or services.

Try not to let anyone start work on site, based on an estimate. - It gives them far too much “scope” or “room for manoeuvre” to be able to come back later and ask you for more money, saying:  “Oh well I did tell you it was only an estimate”! 

Try to get at least a “Quote” from each of the people who will be doing the work, and preferably a “Fixed price quote”, - which requires any variations to be notified in writing, by whoever is instigating the change, and agreed by you BEFORE the extra cost is incurred.

This then covers both parties, either if you want a change in spec for any part of the build, or if the change is requested or suggested by the Contractor / Sub Contractor.

Once you get estimates or quotes, keep hold of them, even after that particular section of work is completed. – The keep them for at least a couple of years after the project has been completed. – Just in case there is a dispute which arises later. They may be needed if you are trying to make a claim against anyone you used during the project and also they will be needed should anything ever “go to court”.

As mentioned earlier, deliveries can have items missing / paperwork can go astray / People can get things wrong. – the more paperwork you are able to put your hands on to solve a problem or in the case of a dispute, the better position you will be in to get a satisfactory solution to that problem.

Whoever you choose to work on your project, and whether you are managing it yourselves, or have taken on a Project Manager / Package Build Company, you should always get contracts in place before you allow work to start.

If you don’t do it before the work starts, it can just tend to be something that gets forgotten until and unless there is some form of minor or major dispute.

A contract doesn’t have to be a complicated thing to draw up. - You could probably “knock together” a simple one yourself, but if you are not confident in doing so, then getting your Solicitor to draw something up which will encompass all the trades, would be a worthwhile exercise.

A contract will help to make sure that you are covered in the event of anything going wrong with any of the subcontractors or the main contractor (Package Build companies will normally have contracts already drawn up which you will both have to agree with and sign before they start to work on the project).

The contract will be something you refer to if ever there is a dispute, and it’s something you can “stick under the nose” of any subcontractor who may be trying to say that you owe them money that you don’t! 

Sums of money that pass between you and all the Subcontractors and suppliers can be very substantial. - It is not unusual to be talking about £5,000 worth of “Extras” on just one particular section of work.

If you have something in your hand which basically says “ You have agreed to do the work within your original price, - which you are trying to get me to pay to you for now”, then you could save yourself a lot of stress and hassle (and money).

 In case you haven’t heard of these, they are a sum of money which the “employer” (you) keeps from the Subcontractor. The amount is usually 5%. Keeping hold of this money helps to ensure that the individual trades all finish the job. It also helps to be holding some money back if there are any problems which come to light after the individual trades have left site.  – They are far more likely to return promptly to site to fix a problem which will cost them an hour’s work if you are couple of hundred pounds back from them!

Normally the money is kept for 6 months and then, subject to there being no claim on it to put right anything which is the responsibility of that particular contractor, it is released.

Once you get the Subcontractor to agree to and sign a “Retention clause”, you should make sure you don’t lose it.

Then when the 6 month period is up and you release either all, or the remaining part of the funds to the subcontractor, you should get them to sign for the funds, saying that they are now “in receipt of the full retention money”. – Again, you never know if in the future there is any problem or dispute over anything that happened during the contract, if you might need to refer to the contracts or retention paperwork.

This is a fairly obvious part of any record keeping process.

Once you have paid “anyone for anything”, especially if you are not actually giving the money directly to the “Accounts department” or to the “Boss”, then just make sure you get the money “checked and signed for”.

Money can often go missing on these projects. - Large sums of cash are often passed from “person to person”. The scenario of “Here, give this £1,000 to the boss when you see him”, in payment for “whatever” is NOT a good one! – That £1,000 can easily become £500 by the time it reaches the boss, and you may then find “the boss” coming to you asking for the rest of the money!