Trust the total contract
Imagine we run a public survey on what do people think about building contractors and what results we can expect. To our surprise, majority may say that contractors are not honest. It can be very hurting for any professional group to get such a rating, for most contractors working on private buildings are actually honest. Somehow, the word contractor has been projected in a negative light, despite many of them being good.
Equally well, the contractors feel the owners may not keep up to their words at the end, raising unreasonable objections about time, quality or the finish, hence they try safeguarding their interests in a subtle way. Contractual systems have evolved partly because of such lack of mutual trust. In labour contract, the owners try an upper hand by controlling materials, while in lump sum, builders gain superiority by minimizing the role of the owners.
People, who felt shortcomings in both, have sought another system called supervision contract. All the costs of material and labour are directly paid by the owner, while the role of the contractors is restricted to instruction, supervision and coordination. They may also help the owner in procuring the materials and measurements, against which they get a percentage of total cost. The owner feels confident about the money outflow and choice of materials, while the contractors feel secure about their income. Though it appears to blend the best of labour and lump sum, it suffers from low degree of commitments from the construction team; less control on minimizing wastage and least control on total project cost.
By far the best system of contracting, also called as item rate contract, refers to the builder being in full charge of the project. As such, there is a single person to inform, instruct and coordinate, which avoids all blame games and conflict of roles. Construction costs are not mentioned separately for materials or labour, but together for an item of work like wall, plastering, railing or water proofing. This would include the cost of material, transportation, wastage, labour, overheads, profits and such others together.
There would be a pre-construction document called Schedule of Quantities prepared by a quantity survey engineer, listing all tasks and quantities, against which the builder quotes the prices for mutual agreement. As the work goes on, bills would be submitted for satisfactorily completed works to be check measured at site by the engineer, certifying for payment by the owner. This system is transparent with every item stated, yet flexible where any material can be changed by changing the rates accordingly. Modes of checking every cost ensures honesty in execution. The owner, designer and the builder can work together without conflicting roles.
Alternate eco-friendly ideas need to evolve with the project to ensure win-win situation for everyone in the construction team. They can not easily fit into the convention contractual systems. The best option is to trust each other and go ahead with the total contract.