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The Essential Guide » The Planning Stage » Construction Terms Explained, Inc: Contractors, Sub Contractors, Package Build

Self Build Terms explained: “Contractors”, “Subcontractors”, “Turnkey Projects” “Design and Build”, “Package Build”.

Introduction:

If you are not familiar with the Building Industry, you may wonder what the difference is between a “Contractor” and a “Sub Contractor”. - Don’t they do the same job? - Aren’t they the same thing? – Not quite.

There are lots of terms that as Self Builders you could do with knowing as you progress your project. – If for no other reason than to sound like you know your subject when you talk to the people who could be doing the work for you! (If you sound like you have no idea of what you are doing, the price of quotations will have a tendency to increase!)

So, over two chapters I am now going to give you a brief description of some of the terms that you will hear used either as you plan and prepare, or when you are actually working on your own individual projects:

Contractors (also known as “Main Contractors” or “Builders”):

These will be the people you would probably take on if you are not going to fully manage the project yourself and want to give most of the building work out in one “package”.

Contractors are more often taken on for Renovation projects than for Self Build projects. They will usually take on most of the “physical construction work”, from digging the foundations through to completion. They will usually supply all the materials and labour, and will normally give you a quote for the work before he starts, which you will then pay in “stages” during the progress of the work.

Stages could be:

· Completion of floor slab

· Wall plate level

· First fixes complete

· Contract complete. (the stages can be flexible depending on the size and nature of the work).

A contractor will not normally be involved in helping with Planning or Building Regs applications, with design work, or with any part of the project which is not the “physical building work”.

A Contractor will normally provide a guarantee for his work on completion.

Note: If you take on a contractor, try not to pay “deposits”. – Some will ask for a few hundred pounds up front “for materials”. - My thinking on that is that: If I buy a car, the manufacturer doesn’t ask me for money up front to help with building the car. If I go shopping, I don’t pay anything as I enter the store “to help pay for the heat and lighting”. – I pay when I have a product in my hand. – Payment for goods is usually once you have them. It is reasonable, on a job which involves a large cash outlay, to pay in stages. BUT, only once you have something YOU ARE HAPPY WITH, to show for the money you are paying out.

Also, if you pay “upfront” you will often find it difficult to get some of the less “scrupulous” contractors to finish the work.

Having to finish a job before they get paid “focuses minds”!

Sub Contractors:

As you get going on your project, you will often hear the term “subby” or “labour only subby”. This is the term used to describe the broader category of “Sub Contractors”.

Sub Contractors are different from Contractors.

A (main) contractor, when a he takes on a project, may use all his own tradesmen. These are workers who are “on the books”, and employed by him.

Sometimes a Main Contractor is set up so that he actually employs no one, and for each contract he takes on a team of tradesmen dependant with skills specific to the individual project.

The people he takes on are the “Subcontractors” or “Subbies”.

A main contractor will normally use “Labour only subbies”, who he will either pay on an hourly rate, or he will get a price from for a particular section of the work.

In a similar way, - for your project, you can directly take on the “subbies” you need for the work.

In the case of a Self Build you are most likely to take on “Labour only subbies”. This will be because the very fact that you are considering using “Sub Contractors” suggests that you are at least partly project managing the job yourself (or it can suggest that you have employed a Project Manager whose job includes finding and taking on all the required Sub Contractors).

In most cases where you are “running” the management side of the contract, you will probably want to have the flexibility to get the best prices for the materials you buy. - By using labour only subbies, you get that option, and it will then be your job to coordinate the materials delivery with the dates that the subbies actually start on site.

If you are project managing and extension, or renovation yourself and you don’t have a lot of experience of building, you may find it is a better option to leave the general materials ordering to the individual sub contractors (this changes their title to: “Supply and Fix Sub Contractors”).

The amounts of materials for different parts of renovation projects are often fairly small, compared to new build, and there can often be the need to find and get hold of something quickly for some part of the work. - If you are working full time as well as project managing the works, you won’t necessarily be around to order “half a dozen plasterboards and 5lb of nails” halfway through a Wednesday morning when the subby finds that he is going to need them.

Often, leaving the sub contractors to look after ordering the materials, - although it may not be the cheapest option, will often be the best way to go.

Another option, if you have more time available, would be:

Rather than take on a “Supply and Fix Sub Contractor”, you could take on “Labour only Sub Contractors, but rather than you having to order all the materials as they are needed, you set up a system with local suppliers, where the sub contractor can ring through orders for the job, which will charged to your account.

This gives you the flexibility to “shop around” prior to starting work to make sure you get the best prices for everything.

Note: Just make sure that you check the invoices for any materials being delivered which you don’t remember being needed for YOUR job! – I have known saws, hammers and materials completely unrelated to the job being “accideintally” added to orders. - Also it’s not uncommon for the odd bag of cement or box of screws to find its way into the back of the subbies van!!

Finally there is another option where you do “a bit of both”.

This is where you take on some “Supply and fix” and some “labour only” subbies.

If you opt for this set up the “supply and fix” guys will tend to be: The ground workers, electricians, plumbers plasterers and the decorators. – The rest of the tradesmen can usually be “Labour Only”.

The benefit of this option is that for parts of the project like, for example the ground works, the job can change dramatically day to day. Problems which are encountered need to be sorted out asap or work will grind to a halt. By giving the Ground works out as a “Supply & Fix” package, you allow the ground workers to take the steps to solve the problems by bringing to site whatever they need to keep work progressing. – For example, they may find that a foundation collapses and they have to take emergency steps to get it fixed so they can still pour concrete that day. – If they had to contact you to ask you what to do and leave it to you to sort out, it could take days before you are able to do so.

Things like “Joinery”, however, can usually be “Labour only”. – You know how many doors you need. You will normally design and order the kitchen, you can measure up skirting boards and architraves fairly easily and the same goes for most of the materials joiners will use. – By you taking on the ordering of the materials here, you could save quite a lot of money over the whole contract.

Note: If you are having a complex decorating scheme it may be best to use labour only decorators so you keep control of ordering all the paints yourself. That way you can make sure you get the types, makes and colours of your choice in each room. – Decorators tend to use one supplier and that supplier may not have exactly what you want

“Turnkey Projects”:

The term “Turnkey” tends to be one which has been associated with “Self Build” rather than “Renovation”.

A traditional “Turnkey” project would involve a company being awarded all of the design and build work the whole project. -They may or may not also include obtaining the Planning Permission and Building Regulations approval.

These contracts are often a favoured option when the client wants a unique house, on a plot and in a location they choose for themselves, but they do not have the time or the ability to take on any practical part of the project.

This option will usually be the most expensive form of Self Building, but can make a project possible for many people when otherwise it would simply not be “on the cards”.

At the start of the process to set up a Turnkey project, the client will generally have a few meetings with at least two or three different companies to decide who they prefer to work with, and to try to get some ideas on what they can offer and how their costs may vary. – If they are happy to proceed, they will then choose one company and basically hand everything over to them.

This company will then “drive” the whole process. - Starting possibly at the “buying the land” stage, with help and advice on choosing the right plot and making offers to the owner. The next stage would usually be moving on to organising design meetings (often with their own design department). Once all the initial decisions have been made, the “Turnkey” company will then progress the project, through the design, planning, and building works, pretty much independently - simply calling on the client for decisions on designs and materials as and when they are needed along the way.

This system is probably the most stress free method of “Self Building” (some people would argue that it is not really Self Build in the true sense of the word). - You can pretty much just watch your new dream home appearing before your eyes, just writing cheques and making simple decisions as and when you need to.

One of the reasons that these types of contracts tend to be expensive is that the “Turnkey” building company is often taking on all the potential problems and pitfalls which could come during the project.

There may be clauses in the contract with them to allow for extra payments in certain circumstances, but in many respects, if they have a “problem free” job, they can make a reasonable profit, but if they hit problems while they build, which can’t be passed on to the client, then their profit margins are eroded. - Most of these companies will build in a “cost buffer” into their prices to cover any unexpected problems which could occur which could push up the build price (this is nothing unusual, all Construction companies do similar things on the larger commercial contracts).

Design and Build projects / Package Build:

These are very similar to “Turnkey” projects, and they are often actually all “lumped” under the same heading.

The differences between them are usually fairly subtle, but generally centre around the amount of input from the client.

A “Turnkey” company may also be a “Design and Build” or “Package Build” company. It’s a bit like a window company supplying and fitting “glass or window frames, or both”. – It’s just different shades of the same thing.

A “Design and Build” or “Package Build” project may involve the client taking care of the buying the land before they bring the design and build company on board.

The client may also be partly or wholly involve in the Planning Permission side of things, and possibly for providing information like site surveys from which the designs can be produced.

“Design and Build”, or “Package Build” projects often have more flexibility within the pricing structure, - where the client may have the option to become more involved in some areas of the project (maybe the decorating, tiling or the site labouring).

If you are considering a project with “No” or “Minimal” input from yourselves, then contacting “Turnkey”, “Design and Build” or “Package Build” companies to see if they could offer what you need is possibly a good place to start.

Note 1: I would recommend that you contact more than one company before you decide which company will be most suitableto work with. – Many of these companies operate Nationally, so distance should not be a problem.

Note 2: You will probably find that the personal financial information you will need to give, and the contracts you will be required to enter into for these types of projects are more complicated and lengthy than you would expect for from a normal builder.

The payment system may also be more onerous on you, with more payments, more often than you would expect if you took on a normal builder. - This is because the company you use will be taking a fairly major risk in taking on each project and they need to make sure they are covered financially (for example, if they order a timber frame costing £30,000 and you “default” on the contract after the frame has been fabricated, they could find themselves with a very large bill to pay, and no money from you to pay for it). – Just make sure you are happy with any contracts before you sign them. – Possibly consider asking your Solicitor to read them and give you a professional view on them.

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