The Three Keystones of Home Improvement

12 March, 2012
by: Cripps Pemberton Greenish

In the residential context a construction project can vary from the construction of a new house to a much smaller project such as the replacement of a kitchen. Depending on the nature and complexity of the proposed works there can be a variety of factors that need to be taken into account. 

These are considered later on but the basic principles affecting any project you will undertake, despite the size, cost or complexity of the project, are as follows:

  • Quality – you will want and expect the works to be completed in accordance with the plans, specifications and drawings you approved.
  • Time – you will want and expect the works to be completed in accordance with your programme.
  • Cost – you will want and expect the design and the works to be completed in accordance with your budget.

Make sure that you have a written contract before you start your works

We would always advise that any project is started with these 3 principles being agreed at the outset and clearly documented.  However, with surprising frequency, many projects are started without any written agreement being in place and problems can arise as a result.

The main point of a written agreement is to create contractual certainty between the contracting parties so that any issues can be resolved simply and quickly.

If any issue needs to be resolved between you and your builder or designer then you can look at the contract. A well-drafted contract should give you the answer. This could save you a lot of time, money and hassle and once the issue is resolved the works can continue.

Which contracts do you need to be aware of?

For works of any substance there will be 2 types of contract:

1) professional appointments; and

2) the contract or contracts for the works.

Professional appointments

These arise in the context of professional services and create the contract between you and each of the consultants you appoint to provide specialist advice for the project.  Examples might include an architect or engineer and for larger projects, a quantity surveyor or project manager.

The major professional institutions publish standard forms of appointment. For instance, the Royal Institute of British Architects (RIBA) publishes agreements for the appointment of architects and the Association for Consultancy and Engineering (ACE) publishes agreements for the appointment of engineers.

Building contract

This is the contract between you and the builder for the construction, and sometimes design, of the works.

Again, standard forms of contract are available such as the Joint Contracts Tribunal (JCT).  Helpfully this publishes a suite of contracts and supporting documents which can be selected to fit the requirements of your project. For the residential developer, these include a contract which can be used by homeowners on domestic projects.  The remaining contracts can be used if the proposed works are substantial.

Points to consider

Often these standard form appointments and contracts can be used without any amendment but this is not always the case.

The contract you enter into needs to take into account, so far as possible, your needs and requirements.   Whilst these contracts are a very useful and comprehensive starting point, some amendments might be necessary.

For instance, if you plan to change the ownership of the property, you will want to ensure the benefit of the appointments and contracts are transferred smoothly to the new owner.  The JCT contracts and the RIBA and ACE appointments do not allow this without the consent of the other party.  The provision will therefore require changing.

For larger projects, you might want your builder to provide you with a parent company guarantee or a performance bond to cover the default or insolvency of the builder. This is particularly relevant in the current economic climate.  Additional security of this kind is commonly used in commercial projects but would also be appropriate for more complex residential projects.

Importantly, the JCT contracts do not provide for these so an amendment will be required.

What happens when things go wrong?

Again, the importance of a written agreement cannot be overstated. A well-drafted contract will contain a clause which will state how a dispute is to be determined and which law is to apply.  If a dispute arises you will want it to be resolved as quickly and cheaply as possible.

Here are a few pointers:

Check that your contract expressly provides for the adjudication of disputes. In commercial projects this has proved to be a very effective method of resolving disputes quickly and cheaply.   However, unless your contract expressly provides for adjudication, it may not be an option for the parties.

Conversely, arbitration can be a relatively expensive exercise, particularly when compared with litigation in the courts. Where the parties are based in England or are English, arbitration is not recommended.

How can we help?

We have a dedicated construction team.  In conjunction with your other professional advisers we can advise on all aspects of the works including the following:

  • pre-project planning;
  • guidance on the form of contract or contracts to be used;
  • drafting, negotiating and completing the selected contract or contracts; and
  • disputes.

Please do get in touch should you require any further information as to the advice and services that we can provide you with.