Planning an extension: Top Tips for managing your construction project

An extension to your home will cost you thousands of pounds and so it is vital that you make the necessary plans, understand the contract before you sign it, appreciate how to manage the project while it is ongoing and know where to turn should disputes arise.  Andrew Cullyer, Litigation Executive specialising in construction disputes, explains more here, particularly for those planning an extension of around £25,000 or less.  Andrew reviews the key basics that are common to all construction contracts, i.e. reading the contract, keeping good records and taking action when problems arise, while also explaining some other top tips to keep your project running smoothly.

Where do I start with a home extension?

When projects go wrong it is often the case that they do so because mistakes were made before a single brick or block was laid.

Three steps you should take before get started are as follows:

1. Know what you want - The more decisions you make before contacting a builder the easier your life will be. This can be everything from big decisions such as what size is it going to be all the way down to small decisions such as what colour paint do you want.  You do not have to make every single decision before works start but the more you can make and the more information available at the start of the project the easier the project will run.
2. Know your budget - This isn’t just a question of how much you want to spend, although that is an important first question to ask.  It is also knowing what items you’re willing to compromise on for the sake of cost and which you are not. Builders will generally give detailed quotes of what they are going to provide and for how much and you must ensure you read these carefully.  Further, it is very important to include an allowance for extra items that need doing that you and most likely your builder just do not know about. Variations or changes often occur during a construction project so you should ensure you have money set aside to cover them.
3. Choose your builder carefully - Choosing which builder to carry out the work is one of the most important decisions you will make and all too many people rush this decision or give it very little thought at all. This is potentially a very quick way to end up out of pocket.

Choosing which builder to go with is usually done on the basis of general reputation or on word of mouth recommendations. These are better than nothing but there are other sources of information:

• Trading Standards run a trusted trader scheme which is worth reviewing.
• It’s always worth checking a builders online reviews on Google, and other review sites.

Finally, when contracting with a limited company always check their recent accounts on Companies House which is free to search.  Contracting with a company with few assets and very little cash can lead to serious problems down the line as your main remedy for breaches of contract will be an award of damages. This is valueless if the company has no money with which to pay.

What do I need to know about my construction contract for my home extension?

Once you know what you want, what your budget is and which builder you want to go with, the next step is getting the contract right:

1. Get a construction contract - A large number of projects go wrong because the agreement is no more than a handshake.  Alternatively, the builder produces a quote and perhaps some standard terms and conditions. It is much better to get an appropriate form of formally drafted contract.  Examples of this include the Federation of Master Builders Contract and the JCT Homeowners Contract.  This will give a good outline of your rights and responsibilities in most situations. These contracts are designed for smaller projects so they do not scale up well, but they are good for low value works.
2. Know your contract - Once you have signed up to a contract, even if it’s just the builder’s terms and conditions, read it, understand it and know its contents.  If and when something happens, review it again.  Contracts are live documents in that they are designed to be used as a project develops.  Knowing the contract will prevent misunderstandings and let you know where the risk lies.  Too many disputes stem from one or both parties not understanding the deal they signed up to.
3. Scope and price - When agreeing or reviewing a contract it is important to understand the scope of the work and the price for it.  If the item is not included in the work scope it might be read into the contract or alternatively it might be a variation.  It is always better for the contract to be explicit about what is included and, as far as possible, about what is excluded.  This prevents confusion when items of work are not done or in ascertaining whether there is a need for a variation.
4. Payment and Payment Terms - Keeping on top of payments can only happen if you know what the payment terms of the contract are and if you stick to them.  There are some payment terms you should not agree to.  Increasingly, we are seeing companies asking customers to sign up to weekly or monthly “stage” payments. These are not stage payments at all but are really just payment plans.  A stage payment should be linked to completion of a stage of the works; they should not simply fall due on a date irrespective of progress of the work. Payments that are not linked to progress put you at risk of the works being delayed and the builder receiving money for work that simply has not been done.  True stage payments that are linked to work progress are a sensible way to structure paying your builder.  You should also avoid making large deposits or upfront payments; a reputable builder should have sufficient cash flow in their business to get started on a project without putting you at additional risk.
5. Get advice - If you have any concerns about your contract, before or after you have signed, it is usually cheaper in the long term to get professional legal advice than to plough on without it.

How to manage my home extension

Once your project has started there are still steps you can take to make sure it runs smoothly:

1. Keep good records – It is well worth keeping a diary of the works and backing up with photographs and any other relevant documentation. If problems arise, having an unambiguous record of events will help keep your memory clear and provide much needed evidence to support any claim.  It is important that any records kept are clearly organised and labelled.  It is of no value to take a picture that it is not clear what it is of or when it is taken.  It may be helpful to send any records you keep to your builder regularly so they can challenge or modify the record as you go.
2. Variations - As the works progress there will inevitably arise items of work that you or your builder consider to be variations. These are items that are believed to be outside of the original scope of work but you would like carried out.  The first step is to check the contract and make comparisons.  If they are variations, before any work is carried out make sure you agree what the item is going to be, how much it’s going to cost and make sure you follow the procedure for variations under the contract.  Variations can lead to disputes particularly at the point they have to be paid for.  Make sure you have agreed to them and they are truly additional to what you originally bargained for.
3. Extensions of time - Most building contracts have a fixed period for completion and if you are wise you would have made sure this was clearly set out in your contract.  Construction projects are often delayed and this can be for a huge variety of reasons.  Sometimes it can be down to the builder, or their supplier, sometimes it can be truly exceptional circumstances and sometimes it can be because you, the client, are slow making decisions about the build or fail to provide relevant information.  You should not allow an extension of time for any delays caused by the builder as this preserves your right to claim damages for delay. There may be a fixed figure for this in the contract (known as liquidated damages or LADS) or it may just be the costs to you of the delay which you can prove.
4. When something goes wrong - Mistakes occur, factors outside of your or your builder’s control also happen; what is important is dealing with them properly.  Your first step when something happens is to get a good record of what factually has occurred.  You should then check the contract to see what it says before trying to agree with the builder what the resolution to the problem is going to be and most importantly who pays and how much.  

What should I do once my home extension is complete?

At the end of the project there is usually a final reconciliation of the account and there will be a snagging process.  Snagging is the remedying of minor defects that do not prevent you using the property. Anything more major than this probably means the work is incomplete and not finished.

This is an ordinary process but any defects not rectified could entitle you to either a refund or damages. Defects, even minor ones, are ultimately breaches of the contract for which the builder can be held accountable.

The final accounting process is simply what it says. At the end of the project, review the work done and not done and the amounts due, including variations and compare that to payments made. Work originally contracted for which was not carried out may entitle you to a refund or abatement. Agreed additional works will have to be paid for.

How do I manage disputes with my builder over my home extension?

Should you get into a dispute with your builder, do not panic. Disagreements are common place and can be resolved amicably.  If you know the contract, have kept good records and have acted promptly the dispute may well be quite easy to resolve.

Even if a dispute seems intractable there are many options open to you. It is always wise at this stage to seek professional legal advice so you can get a good understanding of the way forward and next steps to take, as well as getting an idea of the risks, costs and liabilities involved.

The contract may provide for specific dispute resolution mechanisms such as mediation or adjudication and these will tend to be quicker and cheaper than going to court.  In the worst case, you can always litigate your dispute and we will be available to help you through the process. 

To have your questions answered on your construction project or if you wish to bring a claim against a party involved in your construction project, you can contact Andrew Cullyer today on 023 8071 7482 or email andrewcullyer@warnergoodman.co.uk.

For general Litigation or Dispute Resolution enquiries, contact Amelia Ford on 023 8071 7429 or email ameliaford@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.