Incentives for mutually beneficial behaviour

[WWilts]

When engaging a builder
& an architect

How would you incentivise them to get reasonable quality without piling on fees/labour costs/material costs? 

Pay by hour with cap on fee plus share in reduced costs (compared to target ceiling)? Trust? Other?

[ash_scotland88]

I'm not sure what you're asking or trying to achieve?

An architect has to charge fee's to cover local authority fee's, structural engineers etc let alone their own wage and business costs.

Builders require labourers and buying of materials. You could PM yourself and source all materials but then you'd be paying a quantity surveyor to "count all the nuts and bolts" so you know what to order, but then will you get the same trade discount as a builder?

If you want reasonable quality your paying for quality in materials and the labour to achieve the best results. If you want quality of design, guess what you're paying for the architects time.

 

As an other note a builder has to quantify their material costs to you, unless your well knowledged and verse you won't know the price of materials and amount required, so theirs an element of trust involved when receiving quotes, but that's the thing you get various quotes. Or you could pay that QS fee who'll also go over quotes to ensure your not being over charged on material quantities, but then you don't want to pay fees so the circle continues...

 

The only way to incentives them is to make them aware that budget is low and they'll design and build appropriately. There's not a magic hand shake and phrase to get the same design for cheaper when it comes to the structure of a building*

 

A good architect upfront will save you money in the long term.

 

* Apart from when it comes to things like kitchens or bathrooms where thousands can be saved from researching alternative looking products similar to the big high-end brands, but then it's often looks over quality.

[WWilts]

Thanks, useful points.

 

Actually leaning towards just trust. But taking a look at other approaches in case useful.

[ash_scotland88]

In some more useful advice engage with a local independent architect that's a sole trader. They have less over heads so pricing may be less to facilitate this, but then any specialisation may be charged out as a supporting office isn't there. An architect technician can save you some money in the design stage.

Also look into off the shelf products and standardisation. Eg don't go for custom sized windows, design around standard sizing.* Also design with maximum lengths in mind too, timber comes in a fixed length, dont exceed this.

 

 

* Although this comes in compromise of design quality. We viewed a late 1800 house that had a 2010 extension, massive rear and side. The side was pent roof/vaulted. Original plans submitted the side extension had floor to ceiling glass and shaped to the angle, at some point budget had to be considered and what was built had 6 standardised PVC windows equally spaced (4along the length two to the front) and standard patio doors to the rear. The space ended up feeling like a 60s/70s community or church hall inside and the choice of cladding made it look so on the outside.

[WWilts]

Design completed, planning approved, now getting ready to appoint people for build. Independent architect available, with capable architect assistant, did drawings etc, ready to supervise. Gut feeling is trust this architect & their trusted builders/master contractors, hope for the best.

Just don't want to be over-naive, so open to any tips on how to get the best out of people without going bankrupt

[Bitpipe]

Depending on the build approach, you can PM without doing nuts and bolts counting by splitting the works in to packages and getting trades to do each bit - essentially you're taking the role of main contractor.

 

For us, this worked well as the two critical stages  - demo of existing and construction of basement, followed by erection of a timber frame package, were substantial and discrete elements. We then worked directly with window supplier, roofer, render, electrician, plumber, joiner, plasterer, tiler, kitchen, decorators, flooring, landscapers etc. contracting with each individually.

 

Most contractors were supply & fit (so zero rated for VAT) but we did source all the plumbing second fix items, some lighting, tiles, flooring etc

 

I found being honest and upfront about what we wanted and what stuff cost and what our budget was is key.

 

You need to develop a relationship with each trade  - be nice, offer tea & biscuits but try and avoid over supervision (let them get on with it) but don't be a push over also and be prepared to ask questions. 

[Jilly]

Design completed, planning approved, now getting ready to appoint people for build. Independent architect available, with capable architect assistant, did drawings etc, ready to supervise. Gut feeling is trust this architect & their trusted builders/master contractors, hope for the best.

Just don't want to be over-naive, so open to any tips on how to get the best out of people without going bankrupt

Welcome to that feeling...Engage good people is the best advice. Seems to be a mix of references and gut instinct. My research and discussions have taken £1000s in and out of the equation every week. It's tough. 

 

I read that Duncan Banatyne incentivised his builder (main contractor/PM) to look for cost cutting during the build by sharing the saving with him, compared to the 'as designed' costings. That was on commercial buildings, we self builders tend to be fussy types on, perhaps, our forever homes, so I guess a fugly cheap staircase, for example,  wouldn't cut it. 

 

I don't really see how project managers paid on a % of the build can be anything other than disincentived to save money....I have friends whose self build went over by £100k because their builder was a really good salesman and it all happened before they quite realised.

 

At some point you decide who to trust overall and  jump in. The other way is to get the superstructure done by a main contractor then subcontract and PM the trades yourself. 

 

[Bitpipe]

1 hour ago, Jilly said:

I don't really see how project managers paid on a % of the build can be anything other than disincentived to save money....I have friends whose self build went over by £100k because their builder was a really good salesman and it all happened before they quite realised.

 

I had the same feeling - early on, after we had PP but before we'd landed on a build method, I commissioned a potential PM to do a PHPP analysis and develop a cost plan.

 

The proposed budget (very thoroughly calculated and itemised by a QS) was about 30% over what we had anticipated and his fee was a % on top. However he said that his fee would 'pay for itself' by bringing the build in under this budget.

 

We did PM ourselves, eased by having a comprehensive TF package, and came in 20% under his original figure, even after adding some additional items.

[Dave Jones]

never pay anyone, including estate agents on a %. allways fixed price with targets to be met

 

[Wil]

1 hour ago, Dave Jones said:

never pay anyone, including estate agents on a %. allways fixed price with targets to be met

 

Just on the estate agents- How is that beneficial if they don't sell at asking? Obviously if you get more than asking, a fixed price helps, but on a percentage of sale, they take the pain of achieving any less than asking price along with you.

 

On the OP, trust needs to be built up and it's hard choosing who you can build it with, but keep communicating as that's where it always starts to go wrong.

[Jilly]

Have you read Freakonomics? Because on commission, estate agents are incentivised to pressure you into a sale ASAP as to wait will only give them a tiny drop in income. However, when estate agents sell their OWN houses they take on average 3 times longer to sell, because they are incentivised to wait with a far greater amount of money. 

[Dave Jones]

2 hours ago, Wil said:

Just on the estate agents- How is that beneficial if they don't sell at asking? Obviously if you get more than asking, a fixed price helps, but on a percentage of sale, they take the pain of achieving any less than asking price along with you.

 

On the OP, trust needs to be built up and it's hard choosing who you can build it with, but keep communicating as that's where it always starts to go wrong.

 

incentivise them, asking price they get X your stretch price they get Y. Make X below 0.75% of asking.

 

Try not to drive the trades mad with constant questions/nit picking.  If you see something you dont like ask the architect first as it may be your problem and it saves hassle with the trades. We had a weekly meet on a friday with the gaffer and discussed anything that we wanted to bring up or discuss. This was made clear at the start of the contract/build. No friday meetup no friday pay. He only missed 1 and it kept things on track.

 

Edited November 9, 2020 by Dave Jones

[WWilts]

1 hour ago, Dave Jones said:

No friday meetup no friday pay. He only missed 1 and it kept things on track.

That would get most people to attend. Great idea. Pay week by week in arrears?

[Dave Jones]

paid to agreed in advance milestones subject to negotiation as thgings progressed. For example, roof tiles arrived two months erarly so we paid after a month (builder gets 30 days) part of the roof works price, he produced the invoice we paid said amount.

 

Sometimes factors outside everyone's co0ntrol comes into play, weather!, so have to be pragmatic. Don't expect dates made in advance to be hit. Our roofers for example were weeks behind as the weather meant they were many jobs behind. They came and battened/Tyvek to get it mostly dry so we could continue second fix which was appreciated. I'm not sure they would have if we were on their case every couple days saying where are you, you were meant to be here 3 weeks ago etc .

 

My observation from our previous self builds is the building game is all about compromises from day1, some you will get right and some you wont. 

[WWilts]

All excellent tips. Fingers crossed

[Bitpipe]

17 hours ago, Dave Jones said:

My observation from our previous self builds is the building game is all about compromises from day1, some you will get right and some you wont. 

 

Agree - accept that things will go wrong and focus on prevention and solution but not blame.

 

Many trades have their 'way' of doing things and unless explicitly instructed to do otherwise, will default to the usual.

 

If you expect different then make sure they are aware of this and that it's detailed and costed.

 

I remember finding half of the Velux insulation kit in the skip as the roofer 'didn't bother with it'  but then again I assumed that what was in the box would be installed and we never explicitly discussed it.

 

You learn as you go.