Main Contractor Premium

[swisscheese]

As a kind of addition to Joe90's post with regard to self build/main contractor routes, I'm sorry if this has been covered elsewhere but:

 

I'm wondering What sort of ballpark % figure does a main contractor add on as their premium?  In our locality it seems builders are picking and choosing.

 

I'm weighing up what the cost benefit of pursuing this route maybe.

 

Thanks

 

 

Edited August 17, 2016 by swisscheese
grammer

[DeeJunFan]

going by the quotes i got.  I would say In Northern Ireland its about 10% possibly more elsewhere.

 

And they are also making a margin on the goods they supply as they have large discounts from suppliers but charging you full price.

 

Eg a developer i know has a 35% discount on all plumbing goods but charges clients RRP.

[Mikey_1980]

After MBC finished our Shell, we employed a builder to pretty much finish it to a painting stage.  We sourced our own heating engineers but he used his own subcontractors for Plumbing/Electrics/Plastering etc.  He basically charged us a 10% premium on the quotes that he got for managing their time onsite etc.

 

It worked really well for us and we are very happy with the end result.

[AliG]

My guy adds 10% to anything he buys or subcontracts in.

 

He also adds 5% to things that I have arranged for his time managing them on site.

 

On top of this there are expenses for on site foreman etc.

 

It is not the cheapest, but it is not unreasonable for the amount of work involved.

 

I do check over quotes as he doesn't have that big an incentive to get the cheapest price. I query anything I think is too expensive and ask him to get more quotes.

[Ferdinand]

That is perhaps an argument for paying for materials direct, even with a main contractor.

 

Ferdinand

 

[joe90]

At the risk of repeating what I said earlier, my builder adds nothing onto material prices and commented that he could demand a greater discount than me, if I wanted to source stuff that I had picked ( because it was recommended on here) he would try to get a better price from the supplier as a full time builder and not charge me. If I wanted something that was not in his quote ( posh mirror for the bathroom) he would supply it and charge 5% for admin ( again getting a better price than me) . From what my architect has told me he gets most of the work he quotes for firstly because of his reputation and secondly he is usually good on price ( because he does not make a mark up on price ?) 

[PeterW]

10-15% is not unreasonable - higher on the lower value contracts as they're covering the hassle factor. 

 

Materials mark up is around 5-15% depending on what it is, and the mark up on client supplied items is 10% to account for handling. 

 

Also factor in if you under order then it's not unreasonable for the contractor to charge for lost time waiting for materials. 

[jack]

Also, as a supplier of materials, they need to take responsibility for defects.  If a material defect presents itself after installation, then the contractor has to remove it, source new material and replace it.  If you supply the materials, then there's no such risk, assuming installation wasn't the problem.

[Incipiens Mox]

Sorry if this is a dumb question but does going down the main contractor / project manage route mean that VAT can't be reclaimed by the owner?

 

I believe that's not the case but I heard of a case locallly where a PM expected to process and keep the reclaim as part of his fee.Is that normal practice?

Edited September 12, 2018 by Incipiens Mox

[PeterW]

4 minutes ago, Incipiens Mox said:

Sorry if this is a dumb question but does going down the main contractor / project manage route mean that VAT can't be reclaimed by the owner?

 

I believe that's not the case but I heard of a case locallly where a PM expected to process and keep the reclaim as part of his fee.Is that normal practice?

 

Unless it’s in the contract then it’s legally not possible for anyone but the home owner to reclaim the VAT. They would effectively be reclaiming on behalf of the owner but using their own bank details to “claim” the refund. 

 

I can see how getting a PM to do the claim may be part of the service but given the claim could be north of £10k, I wouldn’t expect to be paying that as a bonus to any PM..!

[PeterW]

@Incipiens Mox to answer the first part though - a main contractor should zero rate their part of the build, any incidental items purchased by the owner that meet the reclaim criteria would still be claimable at the end. 

[jack]

28 minutes ago, Incipiens Mox said:

I believe that's not the case but I heard of a case locallly where a PM expected to process and keep the reclaim as part of his fee.Is that normal practice?

 

Perhaps he/she is VAT registered, and whoever was telling the story confused ordinary business VAT reclaim with the self-build reclaim?

 

Other than that, it's as @PeterW says. If you look at the form for the reclaim, it needs to be filed by the self-builder. I can't see how the project manager could get around that, unless, as Peter says, there's some sort of agreement that the PM's final fee includes the refund being paid to him/her. Seems an odd way to do it though.

[Incipiens Mox]

Thanks @jack and @PeterW. You've described it as I thought. I think the PM here was trying to pull a fast one - perhaps they had written it into the contract.  Not sure.

Edited September 13, 2018 by Incipiens Mox