Fixed Price or Project Managed?

[JAS-Build]

We are at the point of deciding whether we opt for a fixed price from our builder or employ him (with his company) as the Project/Site Manager for our new build project (demolish bungalow and build 2 storey house).

 

We accept that for a fixed price at this time he will have to build in a risk/contingency amount in the price because of the uncertainty over material prices over the period of the build - 48 weeks.  He's set this at around 15%.

 

The alternative is to pay him a fixed sum to project manage the build - with his team plus subbies.  He will control the day to day work to stick to an agreed schedule, make sure all the trades work well together (and earn their money) and assure the quality of the work.  He will also source all the materials, arrange Building Control visits/sign off etc.

 

We will have an open-book meeting with him each week where he will report on how things are going - showing us the exact spend against the projected costs.  If we are over, we either decide what can be saved from elsewhere in the build or dip into the 15% contingency that we will hold.

 

Our concern is - will he be as motivated to stick to schedule and price if he is project managing?   And if not, how do we incentivise him to do so?

 

Grateful of thoughts?

 

JAS

[Dave Jones]

get a price.

[nod]

Plus one 

Get a price He shouldn’t be charging for managing himself 

You will have to agree to material price rises throughout the build Even on a fixed price 

Though most materials seem to have peaked and timber is coming back down 

 

[Dave Jones]

14 hours ago, nod said:

Plus one 

Get a price He shouldn’t be charging for managing himself 

You will have to agree to material price rises throughout the build Even on a fixed price 

Though most materials seem to have peaked and timber is coming back down 

 

 

jewsons just put all underground drainage up 45%

[Gordo]

Fixed price all the way. Time and materials contract will spiral out of control fast. Unless you can financially incentivise the project manager to meet targets. say basic weekly wage for PM and then a bonus for meeting targets like meeting cost, time and quality targets. I don’t know how you would set such targets without professional advice from a QS. Be very careful not to allow contractor/PM to load payments towards the early payment.

 

I have seen some horror stories Where PM has been given too much scope basically stealing materials and defrauding his client. Don't do it unless you are actively involved and very careful and remain suspicious/vigilant 

Edited February 4, 2022 by Gordo

[Dave Jones]

here is the problem with day rate and DIY'rs.

 

No offence but as your clueless on how long anything takes on the building so you are very easy to be taken advantage off. 99.9% of all subbies will take you to the cleaners. They wont be getting repeat work from you so wont care.

 

Get the whole job professionally QS'd (its dirt cheap) and pay in arrears to the the QS for work done. Make this clear from the get go to whoever you pay in the form of writing which they sign. So when you inevitably have issues its all in black and white.

 

 

[JAS-Build]

We're going fixed price with a local builder for slab & finishing, with the main structure being SIPs from ecologic-sips.co.uk.  Separate providers for GSHP/UFH, MVHR & Solar PV

[JohnMo]

If you are going fixed price, make sure you include everything you want in the price.  Changes after quote will be expensive.

 

Go over what lights, what sockets/switches etc you need, wall finished/ materials.  Make sure you know spec of windows and materials, same for internal and outside doors and handles etc.

 

Know what heating system you want.  

 

If you are going airtight, get an air test prior to plasterboard and at completion.  Make sure there is a requirement to fix air leaks to meet agreed airtightness after first test.

 

Sounds like lots of decisions need to made, but make them once and stick with them. 

 

Upgrades and downgrades always cost after an agreement is signed.  If you are not sure agree a per M2 cost to added to fixed price, then if you decide on a floor tile more or less expensive you both know where you stand.

[PeterW]

1 hour ago, JAS-Build said:

We're going fixed price with a local builder

Fixed price or Firm Price ..? Very different and the latter has no movement allowance but the former does. It may include PS (Priced Sum) allowances that can vary widely.