Contract with your Contractor

Before embarking on your building or renovation project, it may be useful to determine the procedures and guidelines regarding contracting work.

For detailed reference, the Cayman Society of Architects, Surveyors and Engineers (CASE) and the Cayman Contractors Association provide two versions of a formal contract for major works: the ‘Standard Form of Building Contract – Private Edition With Quantities,’ and the ‘Standard Form of Building Contract – Private Edition Without Quantities.’ These original contracts are some 30 pages each, and may be obtained from BCQS in the Genesis Building at a cost of $25 each. There is also a CASE Minor Works contract. Use of all these documents requires a working knowledge of contract law.

Briefly, however, here are some useful contract tips and common-sense suggestions to keep in mind when a building or repair job is in the offing. The following is based on information drawn from the sources mentioned above.

Check out the contractor’s background, including recent job references. Personal referrals for more than one recent job are sometimes useful. Make time to visit those jobs to assess the quality, gain ideas and talk to the owners about the work. Don’t choose based on the lowest price alone, for this may mean sub-standard work and hidden costs.

A written contract outlining as many details as possible should be signed before any work commences. As contracts vary, have a knowledgeable person (an engineer, project manager, quantity surveyor or architect) scrutinise your contractor’s document before you sign. Also have your banker/financer review the draft contract. Bank representatives should be given a copy of all contracts before work commences, and may request a meeting with the contractor for further information before project funds are released.

A clear separation should be made in the contract with respect to labour and material costs. Additionally, any external subcontracts (e.g., for electrical, plumbing, equipment rental, excavation work or other special services) should be incorporated into the contract.

One option is to outline in the contract payouts to the contractor once the project reaches specific stages of completion. In any event, bear in mind that the more you pay a contractor, the more you are obligated to stick with him, and the harder it is to negotiate changes. Remember, too, that you’re the boss -- so don’t be shy in making surprise visits and inspections (the help of qualified inspectors or friends in the business will help); or in ordering bad work re-done (at no extra cost to you); or even in firing the contractor and finding another.

Most importantly, stay positive and friendly where possible; be firm, but expect confrontations and even some (contained) losses in the give-and-take.

A materials list with estimated costs should also be provided. Include details of who is responsible for ordering and collecting any items needed for the worksite, as the contractor sometimes expects the owner to do this. If the project is subject to formal approval and inspections by Planning, ensure the builder is in full compliance.

Weekly limits on payments for labour should be included in the contract, as well as firm deadlines for completion of various aspects of the work (eg., masonry/roofing, etc). Owners should add a contingency to the contractor’s price of perhaps 5% to 10% for changes the owner wishes to make to the scope of works. The contractor’s price should be a fixed price with changes or variations to the project being the only reason to increase the contract price. Variations and changes should be documented in writing; if possible obtain a price from the contractor for the change prior to commencing the work.

The most common form of disagreement between owners and contractors are variations and the cost of them.

As many contractors have several projects underway in several locations aular presence to monitor the progress and quality of work on your job site should be agreed upon.

Once the contract is signed, all financial negotiations and fund payments are matters for the owner and the contractor, and are not to be negotiated or discussed with the job foreman or other staff.

Also, although the banks usually release the funds in increments for work underway, remember that it’s your money. Therefore, you can negotiate with your banker for some concessions. For example, instead of spending the entire amount on your reconstruction, place an amount in a fixed deposit – this will allow you to obtain a loan for the same, or a higher, amount. (Since most claims were underpaid due to “underinsurance,” this may be useful).

It’s not necessary to give a reputable contractor any money up front. Instead, you should only pay for work that is actually completed. You have to pay for the required materials, of course, but since few companies are allowing any discounts at the moment, it may be more cost-efficient for you to obtain material lists, shop around and buy for yourself. Order these materials at least a week or two in advance to ensure their availability and delivery.

However, have a SPECIFIC brand or description from the builder or it could cost more; for instance, the difference in plywood costs between ‘CDX’, ‘AC’ and ‘Brazilian Ply’ is significant. If you require a specific material/item for your project, that is, light or plumbing fixture, floor tile, etc., confirm that the contractor has included exactly what you have specified and not an alternative that you have not approved.

Interested in trying to get individual workers to do side jobs for you? Some may freelance at lower costs than through the contractor, but others may only work with the contractor. In any event, in these competitive and challenging times, don’t be afraid to ask questions and explore possibilities, but remember it is illegal for employees on a work permit to work for the homeowner directly without the permit holder’s approval and appropriate arrangements must be made with the relevant Immigration body.

The home/business owner should stipulate all other expectations; e.g., working on weekends or holidays and the related payment rate or on-the-job behaviour, such as drinking, lunch breaks, the removal of construction waste, refuse & litter, etc.

Also, if the crew is working on an existing property and has to use the building’s kitchen/toilet etc., during the day, set rules to ensure that they respect your property and privacy.

Adopt the tools of the trade – to some extent at least. Always have a tape measure, small level, square, grease pencil, receipt book, calculator and notepad with you on site visits or during discussions. This will clarify issues for both you and the builder, and prevent problems of varying magnitudes. Learn the lingo – from soffits and Delcon screws to floorboards and t-valves. It will take a bit more time, but it will be useful.

For more information, contact the Planning Department, telephone 769-PLAN (7526); the Contractor’s Association President Ian Pairaudeau at 949-4666 or Secretary Trent McCoy at 945-4135; or BCQS at telephone 949-8644.