Once you, as a client, are satisfied with the design of your building, and the design has been approved by council, then 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.
What is a Building Contract?
A Building Contract is an Agreement between two or more parties that establishes rights and responsibilities for each. Contracts are made through a simple process – an offer must be made by one party, and that offer must be accepted by another. 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 a contract with a company, be sure to request proof that the person representing the company is authorised to do so.
A contract that has been made verbally is still entirely legal, but they have the potential to be dangerous in the event of a disagreement between parties. This is why written contracts are often preferred – 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 agreement with a contractor, you are not required to pay them until their work has been completed.
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:
- 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.
- The Lump-Sum Contract with a Bill of Quantities
This is more meticulous and accurate form of the Lump-Sum Contract. In addition to the agreement mentioned in the previous contract, building costs are estimated by a Quantity Surveyor. A Quantity Surveyor calculates how much material will be used and how much work has to be done – which is compiled in a document called 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.
- Cost-Plus Contract
The contractor completes the building process using their own capital. The are then reimbursed for all material used and labour put, as well as for their management (to allow them to earn a profit).
- 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 an agreed amount upon completion – rather, they will be paid a monthly salary.
After the Building Contract has been negotiated, it is of utmost importance that the high-quality construction of the building is ensured and maintained. If it isn’t, it can have both aesthetic and structural repercussions. There are several ways in which quality can be guaranteed. The most effective of methods include ensuring that the contractor understands the project specifications, ensuring that the construction team understands the project’s quality requirements, employing workers that possess the necessary skills, failing to accept any element that doesn’t conform to the established quality standard, and finally – by thoroughly checking the construction site and ensuring that it is tidy.
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