It’s funny how you sometimes stumble across the most interesting things by accident, or they appear when you are least expecting them. Last week at the London HomeBuilding & Renovating show, I was presenting an afternoon seminar entitled Project Management together with David Snell, author of Building Your Own Home. It’s a gig we have shared together for four or five years now and we have a pretty well worked routine advising people what to look out for and what to avoid when choosing and later working with builders.
Now a couple of weeks before the show, the Federation of Master Builders (FMB), Britain’s largest trade organisation for small builders, had been on to the organisers asking for some representation at this particular seminar. The FMB have sponsored talks at the HomeBuilding & Renovating shows before and they book stand space there to promote their website findabuilder.co.uk. I politely told them that I didn’t think they would add much to our presentation as we worked to a theme and all it would do is interrupt the flow and reduce time for questions at the end — this particular seminar always gets a shedload of questions.
But it came to pass that the FMB sent a delegation to hear what David and I had to say during our seminar. I sort of anticipated the worst. We talk about how there is a large gap between what should happen in theory and what happens in practice and that the vast majority of selfbuild jobs and small extensions take place with no formal written contracts and that if you start insisting on contracts, penalty clauses and withholding money for months after the job is finished, then you can expect to have a much larger quote in the first place. Oh, and don’t do anything silly like pay cash upfront. All good knock about stuff, and slightly different to the advice I would expect to hear from some organisation full of starch-shirted-stiffs.
I fully expected the FMB delegation to have ago at us for being too cavalier with our advice. They all sat there, two rows back from the front, madly jotting down notes. Sure enough, after the Q & A was over, a couple of them sidled over to us and started to ask subsidiary questions. But blow me down if the point they really wanted to get across to us was that they felt it was perfectly in order for a builder to ask for a deposit before the work starts and that we shouldn’t be advising people that this was not a good idea.
Hang on a minute. Give the bloke cash upfront before he’s so much as broken wind! You are having a laugh, aren’t you? No mate, we at the FMB think upfront deposits are a good idea.
Well, bugger me, I never knew that. Turns out that David and I have been the starch-shirted-stiffs all along and that our advice is far too pompous and unrealistic. Or had we just met the urban guerrilla wing of the FMB?
I logged onto the findabuilder.co.uk website to research further. It’s revealing by what it leaves out, rather than what it promotes. It has advice for homeowners on how to spot a cowboy that suggests that he will do the following:
• EVADE giving you references or details of previous jobs
• OFFER you a 'cheap' deal for cash-in-hand.
• SUGGEST you can avoid paying VAT for cash
• CONFUSE you with jargon and complicated explanations
• INSIST that a written contract is not necessary
• SAY they can start tomorrow (a good builder is usually busy)
• CAN'T give you costings because 'things may change'
• LAUGH when you suggest showing them plans
• GIVE you a surprisingly low quote
• CAN only be reached by mobile and don't have an address on their card
• ASSURE you the details are their problem and you don't need to worry
• KNOCK the opposition
All good stuff, but note there is nothing about asking for payment upfront, in my mind one of the true danger signals that you are dealing with a man of straw. The website, their consumer portal, also contains a code of conduct, which they expect their FMB members to stick to when dealing with the general public. Again, nothing is mentioned at all about the vexed issue of upfront payments. The only conclusion you can draw from this is that the FMB implicitly supports the practice of asking for upfront payments from the general public.
The FMB has a different website, www.fmb.co.uk, dedicated to their members who are all small builders. There you can see a different side to the oganisation. “The FMB is a trade association established over 60 years ago to protect the interests of small and medium-sized building firms.” By encouraging the practice of upfront payments, perhaps?
Coincidentally, our dear government is about to give a huge boost to the FMB by making them a lead player in their new scheme to “kick out the cowboy builders.” Their previous scheme, the ill-fated QualityMark, was finally put to bed earlier this year after five hopeless years in which a lot of our money was spent by central government and almost nothing happened on the ground. In its place we are going to have Trustmark, which is very much QualityMark-lite. In fact very-lite. Whilst QualityMark demanded that member firms paid 0.75% of turnover in order to join, Trustmark is free for the first two years and will only then cost about £10 a year to maintain membership, if the contractor is member of an accredited body (i.e. FMB), although maybe £300 a year if not. Trustmark will be an umbrella group, inc. all FMB members, and many other trade associations. It will offer warranties against defective work and protection against members going out of business during the job, but the warranties will have to be paid for as extras by the clients. In other words, there is protection if you choose to pay for it as an additional insurance policy. Which people just won’t do.
Like the FMB’s own findabuilder.co.uk site, the trustmark site also has some guidance about “protecting yourself from rogues”. And, of course, there is nothing about the dangers of paying upfront. Maybe the FMB had that bit surgically removed as its price for coming on board and giving the organisation some weight in the marketplace. But I can’t help feeling that the FMB will gain more from Trustmark — a DTI sponsored initiative — than vice versa. And the poor old consumer won’t be the least bit protected by either body, as far as I can tell.
So is it ever OK to pay upfront?
I reckon there are some circumstances where it’s fine for a builder to request an upfront payment. Notably where the client has specified some fittings which have to be paid for in advance, or at least require a substantial deposit and for which the builder is acting as a middleman. This happens with a lot of imported gear and it also happens with a large number of timber frame companies. There is also a case for demanding a small deposit on small jobs where the client needs to show that they are serious, say on a new kitchen or a bathroom. But for 90% of building jobs, the materials are (or should be) being purchased on credit and the labour is being paid for a week in arrears so there should be no reason for the contractor to demand an upfront payment, except to ease his cashflow. And a builder with a stretched cashflow is, in my book, one to avoid.
On the other hand, there is good reason to pay a builder in stages as the job progresses. It’s best to tie these interim payments in with landmarks so that everybody knows where they stand. A builder with a solid cashflow would be able to work on something like a payment once a month, maybe once a fortnight. Any less than that and the warning bell should be ringing. The very fact that the FMB doesn’t omit “demanding payment upfront” as one of its code of conduct points suggests strongly to me that many FMB members simply haven’t got the wherewithal to float a small building job. That’s not to say they won’t do a good job, but I personally would be far happier to employ a builder who belonged to no trade organisation who didn’t demand cash upfront than one who was a member of the FMB who did.