What is an ‘open-book’ building contract?
In an open-book contract, we the builder and the client agree on:
- Which costs are remunerable (these are usually the material costs) and
- The margin that we, the builder, will mark up these costs (this is often 5% on material costs). The project is then invoiced to the client based on the actual costs incurred plus the agreed margin.
The benefit of carrying out a project on this basis is that the client can then change the specification of material items such as flooring or fixtures and fittings at any point in the project easily and without any changes to the contract.
First fix and second fix, what do they mean in a building project?
First fix consists of all the work that is required as far as putting the plaster on the internal walls. This includes installing walls, ceilings and floors as well as installing wiring for the electrics and pipes for water.
Second fix comprises all the work after the plastering of the walls. For example the installation of sinks, baths and taps connected to the pipes, doors fitted into doorframes, kitchen units fitted into kitchen spaces and light fittings, sockets or switches connected to electrical outlets.
It is often useful to split a project into first and second fix as the cost of first fix is usually easier to price for, while second fix will depend on what items the client wishes installed. For example bathroom fittings such as a bath and WC, could be purchased for from £200 to £2,000 and a single light fittings could be a plastic pendant with a light bulb to a chandelier with many bulbs! Second fix costs will thus vary a great deal depending on the final spec that a client chooses.
For this reason projects are sometimes priced up to first fix only. If a price for second fix is required a much higher degree of specification is needed by the builder. They will need to know exactly what type of bath or light fitting you intend to install to give an accurate quote.
Building project payment structure
For flat refurbishments, side extensions, house refurbishments, loft conversions and other building projects we will estimate a total project cost based upon your specifications. The cost of the project is usually divided into two parts: labour and materials.
Payment for the project is then divided into equal weekly or monthly payments usually with a retainer (a percentage held back until completion of the project) and up font payment (a percentage payed before the project starts). The value of these payments depends very much on the size of the project and the speed in which it will be completed.