Contracts are entered into between the Owner and Builder prior to commencement of building work. Contracts are usually weighted in favour of the Builder as the terms of the contract are often proposed by the Builder and never challenged.
Progress payments are usually in excess of the value of work performed at the nominated stages. This results in a relatively small payment for the remaining work at the final stage of Practical Completion. However, this does not have to be the case. The amounts offered at the Progress Payment Schedule can be negotiated prior to signing the contract to enable a fairer distribution of funds. We can do this on your behalf to reduce the amount of risk in the event that your Builder becomes insolvent or is unable to complete the build.
Builders often ask for progress payments in advance of the stage being completed. Whilst this is considered to be a breach of contract, some owners allow this to occur for two reasons. The first reason is that they trust the builder hoping that he will utilise the funds appropriately and the second reason that owners may not be aware when the stage of work is deemed complete. We can assess the stages of work for you and advise whether the relevant stage is complete for the release of funds.
In addition to this, Prime Cost Items (PC) and Provisional Sums (PS) are often included in a contract. PC Items are for unspecified fixtures such as baths, taps etc. which may not be chosen or known at the time of signing a contract and a figure is allowed for by the builder. This figure may be well undervalued which results in an excess to be paid by the owner. Provisional Sums are nominated allowances for an unknown quantity where the time taken to complete the task cannot be accurately estimated.