Mitigating Risk With Upfront Payments To Timber Frame Companies?

[HughF]

Letter of credit would sort this mess out….. don’t know how practical getting a TF supplier to agree to one would be though.

[Kelvin]

I tried to get HH to agree to the credit card route. They agreed to do it but ran into problems setting it up so it never happened. Therefore I currently have 40% of the kit price sitting with them with not much protection. They said they are introducing a vesting certificate process which should be in place soon. Anyway consequently I have a nervy three months waiting on it being delivered. For this reason I’d never do a timber kit in this way again unless there was some protection in place. I’m am a bit peeved about it with HH as I flagged this up right at the start and they agreed to the CC protection. 

[Furnace]

I've been in contact with MBC about this today. They have the ability to arrange an 'insurance bond' that pays the holder a fixed amount if MBC fail to perform under the terms of the contract. Underwriter is typically Aviva. Cost is about 6%. Not cheap, but offers peace of mind. They have offered it to a fair number of customers, but it has only ever been actually taken up by one. They don't offer an escrow service.
I'm not sure if arranging multiple 'purchases' is feasible to take advantage of the Section 75 protection. It's possible that the transactions might be viewed as linked and part of a single master transaction.

[Dave Jones]

mega risky in the current climate. are you set on a 8 week build ?

[Furnace]

1 hour ago, Dave Jones said:

are you set on a 8 week build ?

No. I'm wanting an integrated build that ensures air-tightness, so MBC are an obvious candidate. Stick built has more weather-based erection risk and is dependent on finding an engaged and competent build team.

I'm asking them about a letter of credit. I'm also asking about gaining security over materials/components/products I have paid for. It's a far messier mitigation (I don't fancy dealing with an administrator in a warehouse full of gear) but better than nothing.

[Dave Jones]

So wasting all/only benefit of a mega expensive shed build.

 

A normal build at around half the price can achieve the same with none of the risk and deliver a better product.

[Furnace]

27 minutes ago, Dave Jones said:

A normal build at around half the price can achieve the same

I've not yet managed to find a provider of a Passive House stick build that is significantly cheaper. Wilkinson/Touchwood came back with a similar price. Do you have any suggestions?
Cheers

[Iceverge]

1 hour ago, Dave Jones said:

So wasting all/only benefit of a mega expensive shed build.

 

A normal build at around half the price can achieve the same with none of the risk and deliver a better product.

 

 About 15% more expensive in 2019 for us to do MBC Vs wide cavity masonry. 

 

I think we could have self managed more of the build and halved the build schedule. Masonry was slow to get to a passive level of airtighess and had that been taken care of I could have diverted my work elsewhere like plumbing etc so it may have not been much dearer overall. 

 

It depends on how much your time is worth I guess and how much you plan to DIY. 

 

 

Edited June 27, 2023 by Iceverge

[Furnace]

2 hours ago, Iceverge said:

how much you plan to DIY. 

My view has been based upon getting the foundations and shell completed in a timely, airtight fashion, and then arranging follow-on trades and DIY efforts with less dependence on weather and airtightness. As such, I'm drawn towards timber frame and thence MBC style or stick built. The attention to detail is assured with MBC since they offer a guarantee of <0.6ACH, but stick built requires the carpenters/erectors to be diligent and experienced in Passive House site practice; not necessarily easy to find such teams. I've also not found the stick built quotes to be miles away from MBC style quotes.

All suggestions welcome.

[Dave Jones]

4 hours ago, Iceverge said:

 

 About 15% more expensive in 2019 for us to do MBC Vs wide cavity masonry. 

 

I think we could have self managed more of the build and halved the build schedule. Masonry was slow to get to a passive level of airtighess and had that been taken care of I could have diverted my work elsewhere like plumbing etc so it may have not been much dearer overall. 

 

It depends on how much your time is worth I guess and how much you plan to DIY. 

 

 

 

no way a shed build is only 15% more than a normal build unless you were being robbed blind for blockwork.

[Thorfun]

6 hours ago, Furnace said:

My view has been based upon getting the foundations and shell completed in a timely, airtight fashion, and then arranging follow-on trades and DIY efforts with less dependence on weather and airtightness. As such, I'm drawn towards timber frame and thence MBC style or stick built. The attention to detail is assured with MBC since they offer a guarantee of <0.6ACH, but stick built requires the carpenters/erectors to be diligent and experienced in Passive House site practice; not necessarily easy to find such teams. I've also not found the stick built quotes to be miles away from MBC style quotes.

All suggestions welcome.

after doing all the insulating and airtightness regime for our timber frame I can tell you that, even though we saved money, the time it all takes to do well is a lot! so for me it's well worth sticking with the MBC passive house cellulose filled twin-wall system. if your budget will stretch that is.

 

it's not a regret for me as we'll have an amazing house but I do think sometimes that if we didn't build the basement we'd have been able to afford the MBC twin-wall system and would've finished and be in by now! but, on the flip side, I know for a fact that every nook and cranny is filled with insulation with no corners cut.

[Furnace]

15 minutes ago, Thorfun said:

it's well worth sticking with the MBC passive house cellulose filled twin-wall system

I like the system very much. But I'm not so keen on the payment schedule and credit risk. Adding on 5% (£10k) to insure against bankruptcy may be worth it in the broader scheme, and that's what I'm pondering.

[Iceverge]

7 hours ago, Dave Jones said:

 

no way a shed build is only 15% more than a normal build unless you were being robbed blind for blockwork.

 

2018/9/20 prices. Via a main builder a 250mm cavity wall with passive detailing and airtightness was €216k and the same finish for an MBC offering was about €248k from memory. 

 

Had we just built to bregs basic standards we could prob have saved another €20k. 

 

Properly detailing a masonry build isn't free. Almost nobody pays any attention to windtightness for example. The MBC package really seems to have most bases covered. Two omissions I see are really robust window install details and threshold details and clients seem to need to make them up on a case by case basis. 

 

 

 

[Dave Jones]

10 hours ago, Iceverge said:

 

2018/9/20 prices. Via a main builder a 250mm cavity wall with passive detailing and airtightness was €216k and the same finish for an MBC offering was about €248k from memory. 

 

Had we just built to bregs basic standards we could prob have saved another €20k. 

 

Properly detailing a masonry build isn't free. Almost nobody pays any attention to windtightness for example. The MBC package really seems to have most bases covered. Two omissions I see are really robust window install details and threshold details and clients seem to need to make them up on a case by case basis. 

 

 

 

 

Prices are relative, how many m2 of blockwork and what was the cost ?

[Furnace]

11 hours ago, Iceverge said:

The MBC package really seems to have most bases covered. Two omissions I see are really robust window install details and threshold details and clients seem to need to make them up on a case by case basis. 

The stick builder I have been speaking to believes his experience in sealing windows and doors means it a job best left to him rather than the installers. However, reading the numerous threads on this forum there seems a lack of consistency on how to detail to minimise water ingress, management of drips, exit route for drain channels etc.

And all the above assumes the supplier hasn't gone bust while they have my money, and I don't have their product....

 

[Alan Ambrose]

We meed an off-the-shelf solution to this problem - it's come up several times before. Like every time a supplier goes bust.

 

Staged escrow and contract terms like 'raw materials / work in progress belong to customer once that stage has been paid for' etc. I pointed out before that escrow.com offers this kind of service. I'm sure their are others.

[Iceverge]

2 hours ago, Dave Jones said:

 

Prices are relative, how many m2 of blockwork and what was the cost ?

 

232m2. The cost of what?

[Furnace]

MBC have rejected my requests for an escrow facility, and also for any arrangement that assigns ownership of materials to me when stored on their premises. The only protection they will consider is the insurance company route. I haven't see the terms but it seems that it would provide the protection that customers want. There are plenty of trade credit insurers, but for private punters is appears for less well developed and therefore more expensive.
I'd only need protection for 6 months, so a cost of 6% is an annual risk premium of 12% - that sounds expensive for a cash rich company.

[Bozza]

Ours was stick built on site no problem.   Mitigates risk associated with TF companies for obvious reasons.  Additional benefit any last minutes changes easier.  Stick built meant they effectively constructed walls

on site and erected them on site.  Our house was paid for in arrears after every stage was completed & signed off.
 

Bear in mind kits will require transportation, cranes, sometimes road closures.  Our stick frame went up PDQ, slower than kit of course but went up in a week or so.
 

pros & cons for every system.

 

+1 re credit card protection for anything really. 

[saveasteading]

16 minutes ago, Furnace said:

any arrangement that assigns ownership of materials to me when stored on their premises.

I can see that being complex. 

the contract could say it, but their lenders, or other creditors might argue the case.

 

i had a long standing relationship with a very big building manufacturer. Their bank gave us a letter every time, saying that they would repay all moneys in full if the building  materials were not delivered for any reason, upon first request from us.

 

The further we paid in advance, the more discount we got. But you needed the cash..   it generated more than any interest might.

 

So that covered, bankruptcy, civil unrest, loss at sea,  theft or substitution. 

 

Obviously our supplier was paying for this in some way.

 

It can be done, but I guess the relationships between suppliers and banks are not always that comfortable.

[Furnace]

3 minutes ago, saveasteading said:

It can be done, but I guess the relationships between suppliers and banks are not always that comfortable.

And requires the supplier to want the facility to be be in place. MBC don't want it, and their customers don't (currently) seem to require it.

 

[Iceverge]

MBC seem to have as good a reputation a any TF company on here and in my view probably the best product. 

 

However we were in a position where we couldn't afford to do it again if there was a catastrophic loss of cash somewhere. I actually parted with a very good builder because of this after getting in touch with a few of his past clients. "Suprise" bills and changes had occured that he should have priced from the start. 

 

I think given your fears I'd be leaning towards stick build, something like @ProDave but clad in masonry or a proper rain screen. 

 

I guess MBC being a top end supplier regularly dealing with clients who can self insure against £££££ and don't need to deal with the cheaper end of the market we were in. 

 

Stick building can be rapid too. 

https://youtu.be/4nRz0D0bNmg

 

[saveasteading]

3 minutes ago, Iceverge said:

Stick building can be rapid too. 

And raw timber is something anyone can get at much the same price as the manufacturers.

By default there is   markup at the factory.

And then get some more quickly if necessary. 

 

Our stick build materials were from the local bm.   Ordered as a schedule for delivery over a few weeks. Paid by credit card per delivery. Nobody was at risk.

Bm lost a few% in commission but had immediate payment and no risk. 

[Furnace]

I'm not sure I could go with a typical stick build due to the requirement for a passive house build - I'd be relying a huge amount on the contractor to be top notch.
My thinking is on a modified stick build like @IanR did with Cullen/Wilkinson/Touchwood where an Airfix Housefix model is produced from a CAD design in a matter of days and delivered to site for erection. The credit risk is far shorter, and the amounts smaller.

 

[Iceverge]

5 hours ago, Furnace said:

I'm not sure I could go with a typical stick build due to the requirement for a passive house build 

 

What about the stick frame are you worried about?