The Contract –part 2

Theft

Theft can occur in any country and building sites are a rich source of steal’able materials and equipment. If your builder loses all the roof tiles overnight, what happens? Similarly, if someone ‘borrows’ his power tools or his JCB, again who is responsible. It is vital to clarify this in the contract. HE is responsible for materials and equipment, not you. If anything is stolen, he has to replace the items. This will probably encourage him to keep some or all of the building team on site day and night which is a good thing from a security viewpoint.

Are we being hard on the builder? No…not really. Some builders who are not under a clause in the contract making them responsible may well ‘sell’ equipment or materials and you have to replace them. Often those same materials come back after a payment for new has been made. I’m not saying all builders can do this but, again, by specifying clearly in the contract, this can be avoided

Site clean up

This is very often forgotten, but can be a massive cost if the responsibility is not clarified in the contract. Make the builder responsible and there will be less waste and also an ongoing clean-up as the work progresses.

Snagging list

Every build has some issues along the way. Things might not turn out as you planned. The builder may try to cut a corner. There might be a finishing issues with paint or stain. Remember…once you have made the final payment you are in a much weaker position to get things rectified. The builder has had all his money – his focus is on the next contract.

If you retain a portion of the contract value that is only released once all the snagging issues are fixed the builder is much more likely to sort out his mistakes. Ideally that snagging list retention payment is quite large – possibly the bulk of his profit. It is in his interest to fix everything in order to get all his money. Include this snagging list payment in the contract.

Following the contract

It may seem obvious but, especially where it is important, it needs to be stated for clarity that the contract must be followed. For example, the Thai way with electrical installation is to put one or two outlet sockets on the wall and then add more using plug-in gang sockets. If you have carefully illustrated 7 or 8 double wall sockets in your kitchen, I’m guessing you would be less than pleased if the builder thought it was too many and instead fitted 3 single sockets and assumed the shortfall would come from plug in extensions. Enforce the specification. Ensure the clarification. Build to your satisfaction.

The builder needs to understand he is bound to the contract and any changes must be discussed and agreed in writing.

Penalty clauses

Some people want to add this in but I did not for our build. It can put unnecessary pressure onto the builder, who might cut a corner to achieve the deadline. If you start fining the builder he might lose interest or walk off the job. You want the builder to do the best job possible. I see the penalty clause as counter-productive if you have got a good builder and a good relationship with him. Mostly, the build time will be what it will be and both sides should be flexible – within reason of course.

Negotiating and agreeing the contract.

Remember, the contract comes AFTER the builder has given you his construction price. You use that as the basis for working out the stage payments. Firstly, you try to break the contract down into stages, and get agreement for them. Then discuss a realistic timescale in days to complete each stage. Then agree the cash that will be paid. Always pay the stage after it is completed. This encourages completion! It’s not a penalty clause but it does focus the builders mind! Then, discuss and agree the commencement date on site.

Write all those discussions up and, importantly have the contract in both Thai and English. Let the builder read it through. If there are any last-minute changes, come to an agreement and then write them in. and that’s it.

Print up both Thai and English copies of the contract, 2 copies of each. Both you and the builder signs each copy with witness if possible. We used our wives as the witnesses. Each party has a copy of the Thai and English contracts all signed up. The only thing then is to get the build started.

In closing…

Remember, the contract you finalise needs to be fair. Both you and the builder will eventually put your names to it. Take your time. Consider and include elements to get out of it what you need. Make it achievable. Make sure the builder understands what it stands for. Time spent at the start, sorting out this important document will ensure the build goes smoothly once the work commences.