Once the client approves the building design, and it meets council approval, the project can progress to its final stage — the building process. This is an incredibly exciting time for both the client and the architect, but it can also be very stressful if the correct procedures are not followed. This is why it is so important for clients to be well informed as to all relevant information pertaining to the building process – such as what constitutes building contracts, how to achieve acceptable building standards, and all other information necessary for the effective and successful completion of your building. The client, architect and builder on any given project must take part in the contract process.
What is a Contract? – Between the Client, Architect and Builder
Building Plan Application Form
A Building Contract is an Agreement between two or more parties that establishes rights and responsibilities for each. Contracts require a simple process — one party makes an offer, and the other must accept said offer. The acceptance of the offer will conclude the agreement and bring the contract into existence. You are free to accept any offer, not necessarily the lowest, and you may reject all offers tendered, but an offer may only be accepted by the person to whom it was addressed. When you enter into a contract with a company, always request proof of authorisation, i.e. that the representative is legitimate.
A contract drawn-up verbally is still entirely legal. However, in the event of disagreement between parties, they can be dangerous. There is a preference for written contracts, as they add another degree of formality. For legal reasons, be sure to sign your contract and initial each page by hand. In a contract, the client must be specific as to how and when a task will be completed. If these are not specified, the builder or contractor may complete their tasks in any manner or time period. On the other hand, if there is no conflicting contractor agreement, payment is only made upon project completion.
There are a few different types of building contracts in South Africa, so it is important for clients to be aware of all of them before reaching a decision:
1. The Lump-Sum Contract
In a lump-sum contract, the employer’s only responsibility is to pay the builder the agreed amount the moment building is completed in accordance with the approved specifications. In this agreement, the drawings must give the builder a precisely how to build the design, and the employer must know the exact amount they builder must be paid.
2. The Lump-Sum Contract with a Bill of Quantities
This is more meticulous and accurate form of the Lump-Sum Contract. In addition to this contract agreement, the Quantity Surveyor provides cost estimates. A Quantity Surveyor calculates the total material usage and the amount of work needed. This is documented in the ‘Bill of Quantities’. This allows for increased accuracy in selecting the offer with the most value, because they can all be compared to the Bill of Quantities. A Bill of Quantities is used to measure and assess the value of work in progress.
3. Cost-Plus Contract
The contractor completes the building process using their own capital. They are then reimbursed for all material used, and labour and management. This allows them to earn a profit.
4. Labour-Only Contract
If a contractor doesn’t have the required capital, a Labour-Only Contract may be the only option. This means that they will no longer act as an independent Contractor, and will instead be paid as an employee. They will not receive a total amount upon completion, and instead, they will receive a monthly salary.
After negotiating the building contract, it is essential to ensure your process maintains quality standards. If they don’t, there could be aesthetic and structural repercussions. There are several ways to guarantee quality. These include: ensuring the contractor understands the project specifications thoroughly. It is essential to employ workers that possess the necessary skills to execute the tasks set out. And finally, by carefully checking the construction site and ensuring that it is tidy.