Building

Difficult times call for drastic measures and as the COVID-19 pandemic sweeps across our nation, both building contractors and prospective homeowners alike have found themselves considering building contracts on a project management basis for a whole host of reasons. There is an obvious benefit for the building contractor in that this option eases the strain on his cashflow and the prospective homeowner thinks he or she is “scoring” by virtue of the fact that they are now purchasing materials and paying sub-contractors directly. Becoming an owner-builder who employs a project manager is a decision you should not make without giving due consideration to the following:

• PURCHASING MATERIALS AND PAYING SUB-CONTRACTORS DIRECTLY RELIEVES YOUR BUILDER OF ALL RESPONSIBILITY

Under normal circumstances, your building contractor is responsible for the quality of both the materials used and the workmanship delivered. You inadvertently take ownership of these two critical items by paying for materials and settling sub-contractors directly and so if there is a defect at any stage the onus will be on you to rectify the same. 

• WHAT IS THE PROJECT MANAGER’S INCENTIVE TO COMPLETE THE BUILD TIMEOUSLY?

The answer to this question is simply NONE. The longer the contract goes on for the more the project manager stands to make and so it cannot possibly be in the employer’s best interest to build on this basis.  

• IS THERE A CEILING ON THE OVERALL CONTRACT PRICE?

The overall contract price very often gets overlooked when the parties concerned are considering a project management type transaction. The owner-builder is under the impression that the savings he or she will realise by going down this road somehow negate the need to keep tight controls on the financial aspects of the project leading to unexpected overruns. The project manager’s financial obligations to the project are limited at best and the overall contract price has little bearing on his or her involvement. 

• DO YOU HAVE SUFFICIENT RESOURCES TO BE AN OWNER-BUILDER?

Prospective owner-builders totally underestimate the level of involvement that a project management type contract requires of them, both in terms of time and financial resources. This coupled with the fact that they generally have day jobs of their own to attend to creates untold pressure and makes for a very unpleasant building experience.

A reputable building contractor brings a wealth of experience in dealing with suppliers and sub-contractors and knows how to get the best out of the various role players. By paying them directly, you not only affect the builder’s ability to get them to perform but you relieve him of all responsibility if something goes wrong. With little or no incentive to complete the build as quickly as possible, together with a lack of focus and clarity on the overall cost throughout the project, the financial consequences of this type of contract can be dire. The journey to building your dream home is supposed to be an enjoyable one. This simply cannot happen if your level of involvement in the project is such that you are required to become an integral part of the daily operations, notwithstanding the fact you have important decisions to make as far as the selection of your finishes is concerned.