How do I fix a budget and programme and avoid overruns?

16. How do I fix a budget and programme and avoid overruns?

If we are appointed as contract administrator we will act on your behalf to prepare and run the building contract.  This will define a start and completion date for the works, set out the criteria for an allowable extension to the programme (generally only if you make changes or delays are caused by unforeseen circumstances once works are opened up) and the damages due to you if the builder misses the finish date without good reason.  Hours of working, use of your facilities and services, access and storage arrangements are all identified in the contract, and, most importantly, a schedule of dates for valuations and payments for work completed.  Importantly, no payments will be made by you in advance for buying materials etc, only for work actually completed and on site.  During the build we will carry out regular inspections and meetings with the builder to monitor progress and report back to you regularly.  The cost of the works will be defined in the contract and will only be varied if the scope of work changes once the job has begun, and then only once we have issued a variation certificate authorising the adjustment.  Clearly, if all defects can be agreed before the contract is signed and no changes are requested during the build, so much the better and the contract sum will not change.  There are occasions however where you may not have finally selected your choice of tiles or sanitary fittings (for example) or where underlying structures cannot be assessed when the contract begins.  In this instance we include a ‘provisional sum’ – an estimate of what the cost of these items might be reasonably expected to be – in the contract sum, and this figure is adjusted as the actual costs become known during the contract.  Again the adjustment is certified by us, not the builder.

It should be obvious, but is worth re-stating, that the choice of fittings and finishes can have a huge effect on the final cost of a domestic project – a luxury fit-out can be many times the cost of a budget fit-out, even if the underlying construction is very similar.  It is important therefore to establish what level of finish you require and to allow for it when setting the budget at the design stage. We will prepare detailed finishes schedules to ensure that all the finishing touches are allowed for in the contract sum and not overlooked.  In construction, as in most other walks of life, a good rule of thumb is that you get what you pay for and you may need to make value judgements in the design process in order to stay within your budget.  There will always be a more expensive alternative and whilst we can illustrate the options available to you, the final decision on how much to spend will be yours.  It is important to be honest with us about your budget – don’t understate it assuming that otherwise we will raise the specification to the upper limit.  Whether you have an absolute maximum, or a target spend plus a reserve, we will work with you to allocate the costs wisely and spend the available budget where it can achieve most value.  It is also always sensible to build in a small contingency sum to the budget, particularly when working with existing buildings, for unforeseen extra items – for example wet or dry rot in timber, soft spots in the ground requiring more foundations, or faulty wiring or plumbing.

Once the contractor is on site it is essential that all instructions to him are made through the contract administrator, so that we can agree costs and details with him before instructing.  Do not assume that if you ask the builder to ‘just move a partition’ or ‘just add a couple of lights’ he will be doing it as a favour and at no cost because you have made him a cup of tea!  However good the relationship on site, a building contract is a formal document and formal procedures should be followed for the benefit of all concerned.

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