Billing for loss of profit

[Keithsnow 0]

HI , wanted to check if its common for main con to charge for loss of profit (5%) and attendance (5%) for item that you purchase on your own or for which you have got your own contractor?

Which will be the items that will be subject to this ? 

[snoozee 97]

Yes, this is a standard clause which can be imposed by the contractors. But percentage to charge I think its open to negotiation between yourself and your main contractor.

items covered usually quite subjective. But from what I understand, if the main contractor is able to quote and perform the work item but if you insist on nominating your own subcon, the main contractor can claim for the fees for profit and attendance.

One way to get around this is to have your subcon do the work AFTER your main contractor has handed over the site back to you. Cos as long as the site is not handed back to you, the main contractor is liable for any activities what happen on site and his insurance coverage would have to cover your subcon(s) who enter the site for work. Also if your subcon(s) uses water and/or electricity on site, the main contractor has to pay for the utilities right? Also normally subcontractors would have trash after perform works, so the main contractor also need to "help" them dispose of the trash which also costs money.

In short, if you feel 10% is too much, negotiate with your main contractor on the percentage to charge. Unless you can save more than 10% from your main contractor's quoted rates for the subcontractors' works, I would suggest just getting the main contractor to cover the items in their contract.

Reason for suggesting to get the main contractor to do are these :

1. you only need to deal with 1 party (main contractor) for any issues. Ultimately the main contractor would be liable for any defects, etc resulting from his subcontractors' works. But if you get your own subcontractors, then it could become a pushing of liability where the subcon push to maincon and viceversa

2. with the current COVID19 situation, BCA has implemented ALOT of rules/requirements for construction industry. No longer can there be like 30 or 40 workers on site at the same time to perform different works. eg: main con's workers doing structural form works while electrical subcon do pipes/conduits and sanitary subcon run the water and sanitary pipes all at the same time. With the limit on workers and activities on site at any one time, the main contractor has to schedule the subcons to go in during certain days/weeks to perform the works. It would be much easier for the main contractor to coordinate all the scheduling rather than you needing to also coordinate with the main contractor and your own subcontractor on when the subcons can go on site to work. Also, the main contractor has to submit to BCA the information for all workers (including subcontractors workers) who go on site to work BEFORE the workers can go on site to work as well as update BCA on what activities are happening on site week by week. So unless you have time and is also willing to do all these admin work to consolidate the information for your main contractor, then just let the main contractor cover the subcontractors' items and leave the admin headache to him.

[Keithsnow 0]

Snoozee, your guidance on this is very much appreciated. Thank you !

[IceEyez 4]

On 7/2/2020 at 9:58 AM, snoozee said:

Yes, this is a standard clause which can be imposed by the contractors. But percentage to charge I think its open to negotiation between yourself and your main contractor.

items covered usually quite subjective. But from what I understand, if the main contractor is able to quote and perform the work item but if you insist on nominating your own subcon, the main contractor can claim for the fees for profit and attendance.

One way to get around this is to have your subcon do the work AFTER your main contractor has handed over the site back to you. Cos as long as the site is not handed back to you, the main contractor is liable for any activities what happen on site and his insurance coverage would have to cover your subcon(s) who enter the site for work. Also if your subcon(s) uses water and/or electricity on site, the main contractor has to pay for the utilities right? Also normally subcontractors would have trash after perform works, so the main contractor also need to "help" them dispose of the trash which also costs money.

In short, if you feel 10% is too much, negotiate with your main contractor on the percentage to charge. Unless you can save more than 10% from your main contractor's quoted rates for the subcontractors' works, I would suggest just getting the main contractor to cover the items in their contract.

Reason for suggesting to get the main contractor to do are these :

1. you only need to deal with 1 party (main contractor) for any issues. Ultimately the main contractor would be liable for any defects, etc resulting from his subcontractors' works. But if you get your own subcontractors, then it could become a pushing of liability where the subcon push to maincon and viceversa

2. with the current COVID19 situation, BCA has implemented ALOT of rules/requirements for construction industry. No longer can there be like 30 or 40 workers on site at the same time to perform different works. eg: main con's workers doing structural form works while electrical subcon do pipes/conduits and sanitary subcon run the water and sanitary pipes all at the same time. With the limit on workers and activities on site at any one time, the main contractor has to schedule the subcons to go in during certain days/weeks to perform the works. It would be much easier for the main contractor to coordinate all the scheduling rather than you needing to also coordinate with the main contractor and your own subcontractor on when the subcons can go on site to work. Also, the main contractor has to submit to BCA the information for all workers (including subcontractors workers) who go on site to work BEFORE the workers can go on site to work as well as update BCA on what activities are happening on site week by week. So unless you have time and is also willing to do all these admin work to consolidate the information for your main contractor, then just let the main contractor cover the subcontractors' items and leave the admin headache to him.

Just to add on - there is still a risk of getting the subcon to do the work even when the main contractor has handed back the site. Typically houses has a Maintenance Period (like a warranty period) of 1 year. The issue with doing more work with your own subcons will result in a possible situation where the main con insists that the defects are caused by your additional work, rather than surfacing now because of some other underlying problem. 

Example, you install a new canopy and hairline cracks appear on the wall in a month. Likely it was due to bad plastering/painting by the main-contractor due to the time frame, but the main con (if he is irresponsible) could argue that it was caused during the installation of the canopy. Not a happy situation for all parties.

[snoozee 97]

2 hours ago, IceEyez said:

Just to add on - there is still a risk of getting the subcon to do the work even when the main contractor has handed back the site. Typically houses has a Maintenance Period (like a warranty period) of 1 year. The issue with doing more work with your own subcons will result in a possible situation where the main con insists that the defects are caused by your additional work, rather than surfacing now because of some other underlying problem. 

Example, you install a new canopy and hairline cracks appear on the wall in a month. Likely it was due to bad plastering/painting by the main-contractor due to the time frame, but the main con (if he is irresponsible) could argue that it was caused during the installation of the canopy. Not a happy situation for all parties.

That's why it is important to have a good relationship with the main-contractor. I believe that the owner and contractor relationship should be a give and take one. Even though the owner has the right to ask for discounts, to attempt to squeeze every cent's margin out from the main contractor is just plain unreasonable. The main contractor may accede to his margin being squeezed to get the job but it may also mean every change the owner asked for during construction would result in a variation order. If owner engaged own subcon and causes problems after handover, the blame game would start.

If the main contractor is a good and responsible contractor with enough margin for the job, he may close one eye for changes and fix issues at no additional cost though the issue may be caused by another subcon which is engaged directly by the owner.

[petetherock 13]

Interesting..

My builder imposed no charges when I bought my own lights and sanitary fittings... but I paid for the utility bill..

Thanks for the info

[snoozee 97]

14 minutes ago, petetherock said:

Interesting..

My builder imposed no charges when I bought my own lights and sanitary fittings... but I paid for the utility bill..

Thanks for the info

most likely you have given your builder a fat margin for him to just close one eye on you supplying these items. :D

[petetherock 13]

Actually he was the most reasonably priced 

and did a good job

i had some staff discounts so I was keen to get certain items myself ? 

[JustinDavidson 0]

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