Posted: 13/11/2017
In the ninth in our series of blogs for overseas athletes and their advisors, construction specialist Richard Cooke explains how to avoid many of the common pitfalls when carrying out renovations to an existing property or when building a brand new home.
Specifically, we examine:
When house hunting, the received wisdom is that a switched-on purchaser should be prepared to compromise on some of their requirements. The 'ideal', 'perfect' home is never there waiting to be bought. Paradoxically, the more money a purchaser has to spend on a property, the more likely they are to have to compromise — not least because their list of 'must haves' is generally a lot longer than for those on a more limited budget.
So, if compromise when buying really is a must, in order to turn their purchase into their ideal home an affluent purchaser will usually want to carry out some home improvements. At the other extreme, the purchaser may want to carry out major renovations to a property, or they may even want to design their dream home and have it built from scratch. We have all seen the sports and celebrity news about beautiful new houses built in the Home Counties and other rural idylls, and the emergence of the mega-basement and mega-extension with indoor pools and cinema complexes in London and other major cities. All of this is possible but it does require the right steps to be taken, in the right order.
No matter which country the property is located in, as anyone who has been involved in the process will tell you, all construction comes with a large measure of stress, strain and hassle. Construction relating to your prize home brings a whole host of additional pressures as this sort of construction is very personal.
No construction project goes one hundred percent to plan: contractors and suppliers can go bust; programmes can overrun; budgets can be blown; quality issues can be numerous; equipment may not work; and, at worst, the construction may be defective, often requiring expensive and time-consuming remediation. It isn't possible to guarantee that these problems are avoided entirely, but by taking the right steps, at the right time, all of these problems can be significantly reduced.
Many of the points below apply equally to the carrying out of less substantial works to a property, but the remainder of the blog focuses principally on the carrying out of more major construction such as significant renovations to an existing property or a major new build.
Firstly, you will need professional support. The construction sector is very broad and there is a whole host of construction professionals that could be required on the largest and most complex of projects. Most likely, planning permission will be needed and speaking with a good planning consultant at the outset will generally be well advised. As with all construction professionals, personal recommendations count for a lot so ask around to learn who is good in the local market. Good planning consultants generally have strong contacts with the local planning authority and so, here, the local connection shouldn't be underestimated.
Often it is helpful to start up a dialogue with the planning authority at the outset, to get a steer on what will likely be acceptable and unacceptable, but a planner experienced in the local market should know the best approach.
Construction projects are a major source of disputes with neighbours and properly understanding property boundaries and property rights at the outset is well advised. If the property has close neighbours, particularly in urban locations, it may be that a party wall surveyor should be appointed to protect your interests and those of your neighbours. Either way, starting up a dialogue with neighbours to manage their expectations, if handled properly, is generally a good idea.
Other construction professionals that are most likely to be appointed include architect, project manager, quantity surveyor, structural engineer, mechanical and electrical engineer, building services engineer, and building approvals surveyor. On the largest of projects other, more specialist, construction professionals may well be needed. These might include: geotechnical engineer, interior designer, landscape designer, lighting consultant, acoustic consultant, media consultant, traffic planner and specialist advisors in areas like cinemas, swimming pools, saunas, gyms etc.
On a larger-scale project, one of the key consultants will be the project manager (PM) and the PM should be appointed early, as a good PM will provide invaluable support in helping agree scope of services and fees for the other construction professionals and also helping develop the overall procurement approach. A quantity surveyor, or QS, can be thought of as a financial monitor who understands construction. A good QS can keep a tight hold of the budget and help ensure that the client isn't taken advantage of by any of those being paid. The architect will be key, as their approach to design and style will shape the overall feel of the project and the architect will generally take the design lead, coordinating the work of other designers.
On many projects, construction professionals are appointed on little more than an email exchange but such an approach is not to be recommended. It is highly advisable to engage all of the construction professionals on formal appointments so that rights and obligations, and terms and conditions are clear. If you raise this with the construction professional don't be surprised to be offered an appointment from the construction professional based upon their own form. Alternatively, they may offer a form prepared by one of the professional bodies such as the Royal Institute of British Architects (RIBA) or the Royal Institute of Chartered Surveyors (RICS). In general such appointments won't provide you with as much protection as an appointment drafted to more fully protect your interests. Ideally it is worth discussing this with your legal advisers who should be able to help with such documentation. On a larger-scale project this is important as good appointments should provide for a wide range of scenarios that might arise.
Depending upon your cash position, it might be that the project is initially funded by a bank or other funder. If such funding is used, you should expect the bank to be very choosy about all of the construction documentation. They'll want to review all of this and they'll probably insist on appointing a monitoring surveyor. This is because their security for the money funded will largely be protected by having the right documentation in place. If funding requirements are a possibility at all, this should be considered from the outset and your legal advisers will generally seek to secure tighter appointments and contracts that may include the provision of performance bonds, parent company guarantees and collateral warranties which provide direct contractual remedies to funders. Without the right documentation in place most funders simply won't put up the money, so paying some attention to getting these things right does pay dividends.
The quality of this construction documentation can also help if a property is subsequently sold on. Often the purchaser can benefit from warranties from the building contractor, specialist sub-contractors and the design professionals.
It is surprising how many people start construction projects without clearly knowing what they want delivered at the end of the process. It is perhaps not surprising that starting off in this way projects often overrun, cost more than budgeted, and often fail to deliver the best outcome.
Having appointed good designers, it is vital that time is spent with them, explaining your aims and what you want the project to deliver. Don't accept the first design that they come up with. Spend time learning how to read their plans and drawings and be clear that you can visualise what the end result will look like. Start with the 'big picture' points — the number, use and practicality of rooms; and work your way down to the detail — number and type of light fittings, surface finishes etc.
Modern computer aided design (CAD) allows designers to show their designs in three dimensions and now allows the client to walk through or fly through the building. Make the most of this. If a room, doorway, or window isn't the right size or where you want it, get the designers to redesign it. All of this may take time but it is time well spent. The time and cost taken to redesign a CAD drawing is substantially less than the cost and time of having to knock down and rebuild walls once newly built. It is possible to vary a construction contract once started but, as your PM and QS will tell you, this always comes at a high price and an extension to the project timetable.
Horror stories about builders abound but good builders do exist. They do take some finding, however. Again, personal recommendations count, so tap into the knowledge of anyone who might have had a building project that impressed you. The best builders will usually be busy so don't be surprised if they aren't immediately available. The right builder may well be worth waiting for.
The general approach on securing a building contractor is to run some form of tender and typically three or four builders will be asked to put prices and proposals forward. The tender is usually run after the design has been worked up by the architect and design team. Sometimes elements of the work are left to be designed by the building contractor (CDPs or Contractor’s Design Portions) but if tight control of the final product is wanted, the design will usually be fully detailed and specified at time of tender. If you follow the tender route, don't necessarily accept the lowest tender. Your QS should have a feel for the real contract sum and any tenders below this should be treated with caution. Remember, you want your builder to complete the project well, not become insolvent part way through because of underpricing.
The building contract will usually be based upon a standard form contract. Typically contracts in the JCT suite are used but you'd be well advised to tighten up drafting and building contractors are used to seeing schedules of amendments. Again, discuss this with your advisers.
Building contracts often cost large sums of money. They are also contracts that people don't generally enter into on a regular basis so we have little experience with which to compare. By comparison, when buying a prestige car for example, you might be very particular about all sorts of details and specifications; you might be very specific about price; and the best car manufacturers can be very specific about timing of delivery. But organising and paying for building works isn't like buying a car. You should anticipate that things won't go fully to plan; some things won't be as anticipated; some things will take longer than planned; and others will cost more.
If you appoint the right team, on the right appointments and contracts; if you are realistic in your expectations; if you allow some contingency on cost; with a fair wind you'll end up with something very close to your dream home.
This article was first published as a blog on leading sports law website LawInSport in October 2017.
Specifically, we examine:
The reality of construction projects
Where to start when carrying out a major renovation or undertaking a new building project
How to appoint a construction professional
Considering what you want the project to deliver
How to appoint a builder
Managing your expectations – anticipating that things may go wrong
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