The risk
Before committing to any form of construction or refurbishment it pays to minimise your exposure to risk of financial loss.
For example, it is not uncommon for design and build fit-out contractors, when employed directly, to request sizable deposits before starting work. Contractors have also been known to request regular payments throughout the project that bear no relation to the progress achieved. As such, if the contractor goes bust the client may have paid out 50% of the value of works for only 20% progress on-site.
The solution
The best way to protect your interests is to ensure an industry standard contract is in place. This stipulates payment terms based on project progress, so if the contractor goes bust, you have only paid for work actually carried out.
Industry standard contracts
Industry standard contracts are perfectly acceptable to any contractor worth his salt. They contain clauses designed to minimise risk to both contractor and client in the following areas:
- Defective works
- Delay in completion
- Disputes
- Insurance requirements
- Payments to the contractor
- Termination (including insolvency)
- Variations to design
Ideally the intention of entering into a contract should be made clear at first point of contact with the contractor, however there are ways and means of putting one in place during a project because professional contractors are generally open to the idea of an industry standard contract.
Full commercial fit out project management
Colliers CRE's Building Consultancy team can look after all the factors involved in fitting out an office, shop or other type of business premises on your behalf. We'll help you maximise efficiency and minimise cost whilst taking effective steps to reduce risk.
Therefore, if you are about to embark on a construction or refurbishment project or are experiencing difficulties with an existing project please do not hesitate to contact us.
Contact
James Orchard Associate Director +44 20 7344 6815
If James Orchard is unavailable please contact Adam Mehmet.
Adam Mehmet Director +44 20 7344 6781
See also
Our Building Consultancy team provides a range of commercial fit out services that are flexible to your needs.