Does This Payment Schedule Sound Reasonable?

[Mr Sparkle]

Did you stipulate the time limit or did the builder? If you didn't, I don't understand why he has (potentially) imposed penalties upon himself.

The time limit was imposed by the builder

He does this because he is 'confident' that he will finish in the time frame given. He is basically trying to illustrate that he isn't like some other builders that take on a job then take forever to complete it

No.

No reason they need £24K in the first week of a loft conversion

My thoughts exactly

It's just tough at the moment..

A lot of builders in my area have high demand and long wait times.. So if you ask too many questions they move on to 'easier' clients

 

[JP_]

Yeah, and a lot of builders will try to take most of the costs up front, so if things go wrong and they get told to go, they still make a very nice profit.

My loft conversion 6 years ago was £37k total. That included 3 steels, dormer, ensuite, 2 rooms, spotlights throughout. Can't imagine paying £24k before they've even put the scaffold up - and that cost will be part of week one.

If a builder asks for some money on day one after scaffolding has gone up and skip arrived, not a problem, as they need to pay the scaffolder and skip company. But materials should be on account, and payments in accordance with progress they have made - and ideally after BC approve each phase of the job.

 

[wessex101]

The time limit was imposed by the builder

He does this because he is 'confident' that he will finish in the time frame given. He is basically trying to illustrate that he isn't like some other builders that take on a job then take forever to complete it

Do you not think this is just a big fat gimmick?

By the time you are getting to the stage where the job is starting to drag and the final finishing items and second fix are delayed (not to mention all the defects and cut corners are starting to show) he has already got £41K of the the £44K budget. He will have saddled up his horse and be long gone, leaving you severely out of pocket and a "penalty" clause that is totally unenforceable.

 

[JP_]

For my last extension, one builder quoted 25k for the ground clearance and footings. He provided a nice breakdown and payment schedule, but it was bloody obvious he was taking most the money up front (the single storey bricklaying was another 20k or so). You have to wonder why they would do that. OK, some customers are idiots and don't pay, but usually it is because they want to walk away with a profit no matter what. Also means that by the end of the build, if things go a bit sour they have little incentive to do a great finish, as they've already made their profit.

 

[Mr Sparkle]

After telling the builder I wasn't comfortable paying over 50% (£24K) by end of week 1.

He proposed the following payment schedule

Deposit - Paid prior to work £4K

Week 1: Loft floor in - £10K

Week 2: Dormer structure out (i.e. carpentry wise) - £10K

So basically, the 20K which he originally wanted by the end of week 1, is to be split in half over two weeks.

I am curious, how does that sounds?


Looking at the companies info, they have been in business for 4 years, however they are not VAT registered and each year their balance sheet shows net assets of £1

 

[sxturbo]

Nope.

4k upfront ok,

I'd then give them 17k upon water tightness.

And the remainder when it's complete.

If they can't survive without payment until the build is complete they shouldn't be in business

 

[JP_]

Ask how long the total build is. It is better, but it is still £24k for 2 weeks work - loft conversions usually take more than 4 weeks. What is the weekly schedule for the remaining £20k?

 

[Mr Sparkle]

Ask how long the total build is. It is better, but it is still £24k for 2 weeks work - loft conversions usually take more than 4 weeks. What is the weekly schedule for the remaining £20k?

Total cost of works - £44K

Duration is 8-9 weeks

Here is the latest payment plan from the builder

Deposit prior to work - £4K

Payment by end of week 1 - Loft floor in - £10K

Payment by end of week 2 - Dormer structure out (i.e. carpentry wise) - £10K

Payment on completion of main construction - £17K

Final Payment of completion of works (i.e. plastering/2nd fix/electrics) - £3K

Materials and scaffolding arranged by builder

 

[mrrusty]

Both in the commercial world and under the governments fair payment charter the payments should be for the work done and/or the goods delivered. No more, no less. Any builder or contractor working in the commercial environment will be familiar with the applications for payment (progress payments) system which is ubiquitous.

What happens in the private sector seems to just be based on who trusts who least. I would make a point of confirming you will pay no more and no less than strict progress payments. Ask the builder for a priced "activity schedule" for each weeks work, and confirm you will pay on the nail at the end of each week. If they don't agree to that run away and find someone else.

FWIW, I have just booked a £20K+ job from a driveway block paving contractor (it's a big area!), asked about a deposit and he's confirmed as long as the job is under 10 days it is pay 100% on completion. If it looks like it is going to run over he would like a stage payment. He is not the cheapest, but that gives me great faith he is going to do a good job.

 

[thomp1983]

We're in the middle of a 45k extension, we paid a 10% deposit to secure the job, I paid 10k at the end of the second week when a large part of materials were on site and we'll make the next payment at wall plate height which should be about a month away

 

[Mottie]

Looking at the companies info, they have been in business for 4 years, however they are not VAT registered and each year their balance sheet shows net assets of £1

So, they have been going 4 years and in 8-9 weeks, your builder would have exceeded half of the amount needed to be turned over in a year for compulsory vat registration and they’re still not VAT registered? Have they done any other jobs? Have you spoken to the previous clients? That should tell you all you need to know.