Methods of Managing a Building ProjectSet out below are the principle differences between electing to run a project employing a single ‘Main’ contractor, and employing multiple contractors: For simplicity, these will be referred to as the ‘Main Contractor, and 'Self-Build’ processes respectively. As a further reference, most of the projects featured on ‘Grand Designs’ are self build projects, with the exception of the much talked about ‘Huff House’ project. Should you elect the main contractor route, he will manage the project under contract to you for a fixed price and specification. Once you have placed a contract, any and all changes, additions and variations to the specification contained in the documents will vary your project (and contract) costs and program accordingly. Cost control is achieved by asking the main contractor to tender against a bundle of documents which include a detailed Schedule of Works, Design & Construction Drawings, Engineering Designs and Calcs, and any other information on interiors, fixtures and fittings such as brochures and literature, which might inform him and help him to quote you his best price. The main contractor determines the level of overhead (project set-up costs usually referred to as 'preliminaries') and percentage mark-up he applies to the variable costs of the project (labour, specialist fabrications & materials). Overheads principally cover project related management costs, project set-up costs, access arangements, workmens comfort facilities, site security, H & S issues (often referred to as CDM). Mark-ups cover site supervision, main contractor overhead and profit, and will be applied to all core, additional and the variational costs. Ultimately, the market place (regional supply & demand conditions) will determine your project cost. VAT is applied to the whole contract sum. There are many who will value the peace of mind offered by this approach.
With the self build process you are the ‘main contractor’. You would be in charge of your own expenditure and budget. Risk and cost control are managed by comparing quotes with a professionally costed Schedule of Works before acceptance. You would spread your risk by asking a selection of contractors representing the principal trades and components of the project to quote. It is precisely the same approach which is adopted by the ‘main contractor’ to balance his own risk, except you have a greater opportunity to build a personal and contractual relationship with each subcontractor and/or specialist. This you would acieve by submitting the same detailed information, terms and conditions to them for pricing, instead of submitting it to the main contractor. The process is much the same as the main contractor route, but you can personally choose the tradesmen and companies most appropriate to your needs (i.e based on specialisations and/or level of competitiveness) and your risk is spread more widely across many suppliers. Once you have placed your contracts, as ever, any and all changes, additions and variations to the specification contained in the original contract documents will vary your costs and program accordingly, albeit that you can exercise more control over both outcomes. The principle difference between this and the ‘main contractor’ route is
that the project does not attract any main contractor mark-ups, profits, overheads or management charges. You can determine your own level of management and project set-up costs
as well as the extent of day to day supervision, and you would buy
materials at rates negotiated directly with the merchant. Certain
smaller tradesmen and specialist fabricators may not be registered for
VAT.
This must be weighed against the self builder’s increased level of risk and contractual liability, especially in the areas of Third Party, Public, Employers
and H & S liability. To manage this risk, the self builder will
take out specialist insurance and normally employ an independent
professional project manager or architect to take key decisions on his behalf on design, construction, organisation and compliance issues. On larger projects, this will also entail the employment of a top-flight site foreman to supervise day-to-day site management, organisation and safety.
Electing the Self-Build route can equate to a savings between 15% and 30% over the whole contract depending on its size and nature.
A particularly popular way forward is to combine the self-build route with employing the foreman and principal tradesmen (those ‘core’ tradesmen employed from the very start of the project through to its conclusion) on ‘daywork’ rates rather than a fixed price. This means that you are not paying for any ‘contingency provisions’, or overhead and profit margins on core ‘critical path’ work, and have a team at your disposal to ‘drive’ the program and deal quickly and effectively with any changes and additions to the project which may come up – an area where costs can rapidly spiral out of control when travelling more conventional routes. For the determined self-builder, this increased level of involvement and responsibility is rewarded by better control over the project budget, timetable, detail and outcomes, with the potential of significant savings. Common to both approaches is the recommendation to arrange access to effective professional management to provide an overview of the project and deal with compliance issues, statutory authorities and communication between the parties.
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