July 2003

This month is all about: How contracts work, & how to get the best out of your builder.

Building a new house can be a stressful time but it doesn’t need to be. And I must say (based on the way we run our business) I believe the main reasons some people get stressed is a lack of understanding about what exactly they have committed to when signing a housing contract agreement and how building projects and building contracts work. So to help my clients understand it all I put this letter together and post it to them immediately after all terms and conditions have been agreed to. It explains how things work, it makes projects fun and enjoyable, and the letter reads like this:

How To Get A Great Job, How To Get The Best Out Of Your Builder And How To Enjoy Your Building Experience

Dear Mr & Mrs house builder,

This letter is designed to explain how your contract with us works, how to get the best out of your builder & subcontractors, how both builder and client benefit from working as a team. The client also needs to start selecting colours, fittings and fixtures now. Building a new home can be stressful for both client and builder, but it doesn’t need to be. All it takes is for both sides to walk in each other’s shoes and communicate, that way we understand what is required and expected from each other.

Teamwork:

I realise you’ve probably never built a new house before or at least it’s not something you do very often and because of that I thought the best way of getting the most out of this experience is to write and explain how things work. Because, as I say, misunderstanding can lead to stress.

As you can see the contract (i.e. plans, specifications and other legal papers etc) makes up a large document, we know them very well and know that we have to perform to them – they are the rules, so to speak. Without being disrespectful I know that you are very unfamiliar with them, and you will be placing a lot of faith in us to make sure it is followed as per the written agreement, and make no mistake, we will be. We take our guarantee very seriously, to the point if we don’t do what we say we will suffer by self-inflection, that’s what a guarantee must do.

Because of client unfamiliarity with house contract documents we have found in the past that some clients make a lot of assumptions. Some things they assume they shouldn’t get and do, and other things they assume they should get and don’t. On occasions when we try to explain we are sometimes not believed. When we’re not believed, unfortunately the trust starts to disappear and mistrust begins to grow.

Sadly, from time to time, we also experience clients who say to themselves: I’m going to make sure I get my pound of flesh from these guys. They try to demand more than what is specified or things that are unrealistic.

While those clients that trust us and want to work with us as a team will have fun building their new home or construction project, will enjoy the experience and always get more freebies than they could expect, not just from us (the builders) but from all of our subbies. It’s called reciprocity i.e. we get back what we give out.

If there is no give and take, trust or flexibility, the team (myself and my subbies) tend to stick to the absolute letter of the contract documents. On the odd occasion when we have done that in the past things become more stressful, everyone is on edge, small extras are not done for free, which usually ends up costing everyone more.

Most of our clients we’ll do almost everything for, while the remainder that wave the big stick and make unreasonable demands just get what we have too supply. The more aggressive the client is the less we do. It’s a natural reaction. It all comes back to a lack of understanding by the client of the contract documents and a determination to stamp their authority on their project.

Also, some clients try to bend the rules with extras and changes because they don’t want to pay the builder’s margin. Let me explain. Extras and changes to a house contract can be involved and expensive. But with extras and changes someone has to organise it, control it, administer it and guarantee it. But unfortunately what upsets some clients is that the builder’s margin is only seen as an unnecessary additional expense to the extra and don’t like paying it. I’ve even had clients in the past try to employ subbies or staff direct to avoid paying the builder’s margin, but subbies and staff have been warned of the consequences if they accept.

Sometimes a client will see specials on plumbing, electrical, painting or carpentry fittings and fixtures while out shopping and think they can buy things themselves and make a saving, and sometimes you can. But remember, you may have already employed us to purchase these goods and if it’s already part of the contract then it must go through the system. One of the main reasons for us insisting that all products go through the system is that if there is ever a problem with the product and we haven’t supplied it there can be arguments as to whose fault it is and who’s going to repair it. Not to mention that the builder’s guarantee will not cover it.

Finally, when owners supply fittings or fixtures for the builder or his subbie to fit, things always seem to go wrong. Why does the owner want to supply goods on to the job for the builder or his subbies to fit? – To save money. I don’t believe I can ever remember an installation going well from something the owner has supplied. Why, what goes wrong. Because the owner and the retailer don’t have an understanding of project, the specification or what’s required. All the retailer wants to do is make a sale. Things are supplied too late, too short, too long, insufficient parts, wrong parts, wrong connections etc etc. So when the owner ends up paying the subcontractor to fix up and it costs even more than what it would have cost if the builder had organised it in the first place, then the client gets angry at us.

Before I started to use this letter to explain on site pitfalls the above circumstances used to happen more often.

Why jobs go sour.

Here are seven main reasons why jobs go sour.

1. Either party is not keeping to what they promised.
2. The builder or his sub-contractors are not performing as to the plans, specification or contract documentation.
3. The builder leaves the job to work elsewhere.
4. The owners don’t understand, have misinterpreted or are unable to interpret the plans, specification or contract documentation and make assumptions rather than stating fact.
5. The owner wants to buy materials for the job because they believe they can provide it cheaper and save money.
6. Without being given a fair chance, builders and subcontractors are looked upon suspiciously or not trusted. Many owners have an attitude that they’re smarter than the contractors and are not about to be ripped off by them. They then wave the big stick. Owners don’t realise how little they know about the finer points of building and the building contract, and just how many free benefits they can get by looking after the team.
7. Poor communication, communication is the key.

Shopping and other decisions:

In the specification there are dollar sums allowed for fittings or fixtures that have not been chosen yet. Also you need to confirm colours for things like roof, spouting, windows and the garage door. Wallpapers need to be chosen; as some papers are not in stock and can take months to become available.

To start this process go to your specification and highlight all the dollar sums allowed. This becomes the list you need to deal with, each item one at a time. A Moss Brothers employee will set up a meeting with you to set a plan of action to choose all the finishing’s and fixtures. You will also hear from our subcontractors who will tell you where you can go see and select products.

Yours sincerely
Julian Moss &
The team at Moss Brothers Housing

PS: If you have any worries or concerns at any stage throughout the construction program, please call me. You can always get me at the office but if it’s an emergency and it’s after hours don’t hesitate to phone me at home on 06-377-1779. If I don’t answer the phone, always leave a message because if it’s dinnertime and I’m eating some home cooked Chinese I won’t let the telephone disturb me. But you can be assured I will be in constant contact with you to try and disperse those concerns before they happen.

As you can see the letter spells out common problems that can be encountered during the course of a building project. I like to think it make both parties stop and think about their actions so that the building project can be enjoyable and memorable.