Following on from some earlier posts on this where I raised the issue at the time of getting the quotes, the quote that we'd most like to go with looks like this (together with the stated payment terms)
(hope the wrapping on this doesn't make it too hard to read in some newsreaders)
Cost of conservatory supplied - £8,837 (a)
Cost of installation - £720 (b) (paid directly to installer)
Planning approval - £400 (c) (paid direct to architect)
Cost of building works, including - £1,980 (d) base, brickwork, electrics etc (paid direct to tradesmen)
TOTAL -£11,937
The payment terms are as follows:
Deposit with order - 2,837 (1)
Planning fee - £400 (2)
Building works completion - 1,805 (3)
Delivery of conservatory - 6,000 (4)
Completion of electrics - 175 (5)
Installation completion - 720 (6)
TOTAL - 11,937
Although it doesn't specifiy who the actual payments are to be made to, obviously (1) + (4) + (a), (2) = (c), (6) = (b), and (3) + (5) = (d)
My problem with this is that by the time the conservatory has been delivered to site, but not erected, I've paid over £11,000 of the total bill, with only (5) and (6) outstanding.
Furthermore, neither of the outstanding amounts is payable to the conservatory supplier. (ie the people I'm doing business with), but to their subcontractors, who I'm supposed to pay direct. In effect, the conservatory supplier is paid their part in full by the time they deliver the unit to site, before its even been touched.
[Note: given the time taken to process planning applications, which is not within the control of the supplier, the supplier has stated that they would reduce the deposit payable (1) to a nominal amount until planning has been granted. This would then increase the balance payable (4) by a corresponding amount]
Now, I'm not trying to nail the supplier to the floor on this - I understand that everyone has to make a living along the way - but my preference would be for two things:
i) all payments made by me, with the possible exception of the planning costs, I would like to be paid to one supplier - the conservatory company - and leave them to sort out payment to their subcontractors
ii) I'd like to still be holding somewhat more than 10% of the total cost, say £1,500 - £2,000, until the project is completed to my satisfaction.
Before I propose something like this to the supplier, my questions are
- Am I being unreasonable?
- If they don't even want to go with option i), and insist that all the suppliers should be paid separately, should I even go ahead with them?
- If they would go for i) but not ii), or alternatively ii) but not i), what would be a good compromise solution?
I'm satisfied that the quality of the proposed product looks OK (its a Shield Conservatory) and the quote is somewhat less than others, (which have been up to £19,700 for essentially the same thing), so if possible I'd like to find a way to take something back to them that would work
Much too much too soon, especially if you are paying some contractors separately. For example, you can't reasonably withhold on the electrician because the conservator supplier misbehaved.
I would agree to architect separately and planning fee (assuming it's even required.)
I would want all basework and conservatory supply as one contract to avoid three way disputes on base builders and conservatory supplier. The argument will be that you will pay more because the conservatory supplier will mark up any payment to the base builder.
In my case, the main contract was with the conservatory supplier and they subbed out the base. There were some project management issues with the base builder which were all fixed OK in the end, but I would not have wanted a three way dispute. Since almost all of the cost is to these two areas, I dould go for a supplier who will bundle the contract even if you pay a bit more.
I think that the deposit is high. I would negotiate it down to 10% but accept 15%. No more.
I would also want 50% of the contract payment outstanding until completion to satisfaction. £720 is only 6%. They can afford to lose that. On a contract of this value, try for 50%, but if not, accept £5k as the final payment. If there is a dispute, it is then a small claims matter.
I wouldn't worry about paying the electrician or somebody to screed the floor and things like that, outside the main contract; The amounts are small and you will save the conservatory company's markup.
Yes and no. The planning is an out of pocket expense.
If you are OK with the deposit plus this, then you don't need to necessarily push on that. Do make sure you pay it by credit card or another regulated credit agreement without early repayment penalty.
Then if they go bust in the interim, you are protected.
You don't need to do so, but it would be far safer to have one contract, but do be prepared to pay a bit more for it.
I agree but would not be hard about that on the electrician. The amount is small an you will save money. The risk is low.
I would have the conservatory supply and erection and groundwork all on one contract.
I think that that is too little too give you leverage if something bad happens along the way.
I had the following structure to the contract. Architects fees were not involved:
- Initial deposit - 10%
- Stage payment after completion of ground work, further 15%
- Stage payment on completion of base and delivery to site of remaining materials of frame etc., further 25%
- Final payment on satisfactory completion - 50%
Nope. I think you can be firmer than even you are suggesting.
Nope, but be prepared to pay a bit more.. Think also about what happens if there's a problem in 5 years time and you need to invoke the guarantee and each says it's the other's fault.
Too little. £2000 withheld does not give you enough leverage.
On a contract of this value, they have probably covered most of their material and labour costs by 50-75% of the value having been paid. Beyond that, the discussion is about their margin, which if they screw up and you withhold £2k, they can almost afford to write it off.
Having the situation the other way round where you owe them money and hold out on them until perfection is achieved, is far better.
I had a situation where there were issues of supervision during the project. I had discussed this at great length with the company involved that I expected very good project management to make sure that everything ran smoothly. There were a series of shortcomings in this area which involved real cost as a result of some damage to the drive that they did through carelessness (or rather the base builder did), which all in all, accounting for the hassle and time involved added up to about £7000. However, some of the time aspects would have been difficult to defend. I paid them £2000 on completion and withheld £5k and waited until they inevitably threatened legal action.
Needless to say I had put together a very well prepared case which ran to 20 pages and sent this to their solicitors, who of course knew very well the significance of an outstanding £5k. The discussion went back and forth with more information being added by me each time and their settlement agreement offer figure rose from £1500 to £3500. In the end I settled with them on an agreement for £3500 deduction, £1000 worth of items for the conservatory and an agreement not to reveal the name of the company. I also have the satisfaction of knowing that they spent several £k on professional fees - way in excess of if they had agreed to my initial £7k proposal.
So the moral of the story is don't approach this with the attitude that they will get it all wrong and you'll get a poor outcome, but that you will cover yourself at all stages and make it clear to them that you are paying a good price for what they have represented to you as being a good product. You are simply expecting them to do what they say they are going to do.
Some suppliers find it a real shock to be held to their commitments. Do make sure that everything is in writing and that they confirm every little detail in writing. No confirmation, no money.
Remember that once the project starts, they have the cash flow issue and you have a lot of control. Keep it for as long as you can.
Is it the same though? Apart from the materials, and perhaps there are some differences, this one is partly less because the element of one contract isn't there.
All things considered, I would probably be prepared on a deal of £11700 to pay £12500 for the terms and conditions that I described - not more than that and certainly not £19700. That one would probably be negotiable down to £17k at a guess.
You could try something like the structure I've suggested and see if they go for it or something close.
My concern in going for the absolute lowest price is that you are running risk in three areas.
a) They may have cash flow problems because they are asking you to pay subcontractors directly, and large proportions of payment early in the contract.
b) They may be running to a very low margin which reduces their cushion to be in business in the future when you may need them. They may offer an insruance backed guarantee. This goes into the cost, but read very carefully the terms and conditions. Some are not worth the paper they are written on.
c) The resources may not be there to resolve problems and you could have a lot of hassle getting things fixed as a result of agreements with different suppliers.
You could do a simple check on the company.
Go to the Companies House web site and for £10 or so you can download the last year's accounts and return. If it is a company of less than approx £2.5m turnover (can't remember the precise figure) they only have to file short form accounts but there may be clues in them. One telltale is if they are persistently late on filing. You can get some information on company debt, who the directors are and where they live. Are the directors involved in other businesses or have they ever been disqualified. You can get some indication of the company's payment behaviour by going to the Dun and Bradstreet UK web site. From there you can pay £15 and get a shortform report on this. It is only a guide, but if they are poor payers, be careful. You could ask them to supply a bank reference to your bank manager.
If your main criterion is the lowest price and you are prepared to handle some contractual hassle if it arises then OK. There is no guaranteee that paying more alleviates that, but I would be careful about companies who operate close to the wind. It only needs a supplier with whom they have had a poor payment record or their bank to withdraw credit facilities and their cash flow can be out of the window. If they are then insolvent, you become an unsecured creditor.
At the very least, if you do nothing else, cover yourself with a credit agreement or credit card payment to give some protection.
Thanks for some good feedback here - more or less confirmed what I thought.
As it happens, I received the final quote I'd been waiting for in this morning's mail. I'd discounted it, because from the way the guy was talking when he visited, it was shaping up to be a lot more expensive. Its come in at £12,458, although that doesn't include the two roof vents, which they quote at £230 each, or the planning fee, which they do for £295 using their in house surveyor. It also doesn't include an air con unit, although the other one doesn't either, but which the first company said they would supply and fit for an extra £500 (list for it is £895), ie pushing the whole thing with them to £12,437
This second quote is using an Ultraframe roof, and with all the building work carried out by in house builders. The stage payments, however, are
Deposit 10% Completion of building work 20% Final completion 70%
which, with the added convenience of one point of contact using in- house personnel, certainly makes it more attractive, even at a higher cost. I've explained my position to the guy there, and am waiting for them to get back to me with a price including the roof vents and the a/c unit, but I'm more inclined to take it even at the higher price. I told them what the quote was that they were competing with, although I'll be surprised if they match it for the same spec. Be interesting to see what they come back with
You're welcome. It was all based on experiences and I'm glad I put the ducks in line at the start of the project.
To be fair, I am quite picky, but not beyond the point of expecting people to deliver on their commitments.....
I think that these are reasonable figures.
Ultraframe roofs are used by quite a lot of suppliers, even those who make their own wall components. The reputation is good and I have had no issues with mine. I suspect that it's an issue of tooling for the roof components being somewhat different.
That's a much fairer spread. You may find that they want the planning fee upfront as well, but that's not so bad.
I would go with this new one, unless any of the others are close. You may find they will come down a bit, but will know that the single responsibility aspect is worth something.
I would still spend £10 at Companies House and look at their financials. Their may be some information of interest.
Just to finish this up, I spoke to this company after receiving their quote, told them what the competitve quote was, and they've revised theirs. They've added in the air con unit, and the two roof vents, and some extra electrics, and the planning fee, and *reduced* the total cost by £25, still with payment terms that only require payment of 30% of the total costs before satisfactory completion of the whole project, so the decision becomes a bit of a no brainer. Also a neighbour of mine used them last year for his own conservatory and he was extremely impressed with them, so it looks like I'll be going with them
I think this is excellent advice by Andy Hall and would suggest that it should be placed in the D-I-Y FAQs if Andy is willing. Thank you Andy Best Regards Tom
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