Property Developer - Successful Negotiation

Faced with a dispute with your contractors, it’s so easy to fly off the handle and lose your temper. Bring out your inner negotiator, however, and you’ll stay in control and get what you want.

What’s the problem? Oops, no written quote

A typical problem for a developer is a change to the original plans arising part way through a project. On one of my building projects, I got a quote verbally, and I had worked with the contractor before, so I didn’t seek a detailed written quote. However, further down the line, I was told that the quote had only been for a basic renovation, and that what I had opted for was much more complex, and more expensive too.

In this situation, there’s nothing to gain from getting lawyers involved. Just keep a cool head and look at your alternatives first.

In my situation, I had nothing in writing so it made sense to negotiate. I ended up paying Six hundred pounds extra - but this is a lot less than I would have paid on legal fees. Also any legal action would have ruined a basically good relationship and slowed down the completion of my project.

Here are some alternatives

Ask yourself how urgent the disputed work really is to your project. If it makes financial sense, you can always hold off until you have found another contractor.

In any building project, time is money, but the cost of the delayed work could be much lower than the cost of a dispute. If you have developed a broad network of contractors (and I strongly recommend that you do!) it can be very quick to find an alternative tradesman who will do the work instead.

There are always resources available for finding a good tradesman. My website, www.propertyownersdirectory.com lists tradesmen across the UK, and any tradesman with a ‘thumbs up’ symbol next to their name, is a tradesman who has submitted at least two references from satisfied clients.

Knowing your team

An all-in-one building company who will do all the work for you can help you significantly, especially if you also have a full-time job or are running a number of building projects simultaneously. But, you will pay extra for this service.

If you are using a building company who claim to do everything, make sure you understand the contractors’ relationships to one another.

Do your contractors have insurance?

If the contractor you are dealing with really is one business, then there will be just one insurance policy that should cover all the types of work the contractor is undertaking.

However if you are dealing with lots of separate contractors operating acting as if they were one business, then you will need to ensure that they each have the right insurance, including public liability and employers’ liability up to the value of £1,000,000.

If they haven’t got insurance, tell them to get it.

If you are putting a team of contractors together yourself, use people who have worked together before and know how the other operates. If contractors aren’t working well together then they blame one another for any mistakes or problems.

Establish a team that respects and trust one another and you’ll have the makings of a successful project.

Your money

As the developer, you are in charge of the cash, so remember that you are in the best position to negotiation.

Key Tip: Only pay in advance for materials, not for work.

Keep in mind, too, that you are a property developer, and as such you represent a source of high quality and consistent work for your contractor.

It may well be that they have no desire to cut themselves off from your valuable work, and are just as keen to seek an amicable solution as you. In the current climate, a happy client who provides them with regular work is worth a lot and you can, gently, use this point to negotiate better deals.