Pricing
When you have chosen your Tradesperson and received their cost proposal you need to check if the price is actually a quote, and estimate so something else. There are different methods of pricing a job which will impact how the project is managed and also how much you actually pay.
This section will inform you about the different types of pricing you may encounter.
Top Tip
Ask what quality the tradesperson provides costs for. They may provide an entry level/basic finish cost whereas you are expecting a higher level finish. Example: You want porcelain tiles at £50 per square metre, and they typically cost for £25 per square metre. Discuss this early to avoid assumptions and confusion.
Contents:
Pricing Methods
- Quotations
- Estimates
- Provisional Sum
- Prime Cost (PC) Sum (not recommended)
Pricing Assessment
Payments
Quotations
Preferably a document a builder gives to a client, stating the cost of goods or services before the client decides to buy.
It includes the price and terms of the offer.
Quotes let the client know how much they will need to pay, so there are no surprises when they agree to the service or purchase.
Good for
Small works such as routine maintenance and a single, non complex task
Beware!
Verbal quotations need to be backed up in writing or text; if they do not send one through within 48 hours of providing a quote, send through a confirmation of your conversation and the quoted amount.
If you add any new items to the scope after costs have been agreed, none of this work has been quoted for, will incur extra costs and may cause missed timelines.
If your work uncovers an issue that had not been anticipated by the tradesperson (ie: dangerous cabling) you will need to discuss options and costs on site. This will cost you more though you need to understand impact to cost, time and if there is any knock on effect to other areas of the property (See Managing Scope Creep section )
Estimates
A document given to a customer showing how much the tradesperson thinks they will be charging for the goods or services.
It is not a final price, so the actual cost can be higher or lower when you send the invoice.
Before accepting an estimate, it’s important to understand what you’ll be charged for things like labour, profit, and any added costs on materials.
Good for:
Small works such as a new flooring finish or medium works such as a wall removal or a room refurbishment where works may be uncover hidden issue(s) that need working on; as with Quotes you will need more information to make an informed decision and control costs.
Beware
Estimates are rough and may be exaggerated to avoid potentially difficult conversations if the cost needs to go up. Understand what you are being charged for.
If a contractor exaggerates as written above and you accept the estimate, they are allowed to charge the initial estimate amount even if it is far more than the works needed.
Provisional Sum (PS)
A Provisional Sum (PS)
An allowance (best guess) amount, usually estimated by a consultant. A provisional sum is an estimated amount set aside in project documents for work that hasn’t been fully defined or costed yet.
Typically included in a fixed price (lump sum) proposal and will cover items that cannot be costed effectively this early in the process.
When the work is done, the actual cost will replace the provisional sum in the contract, and the total price will be adjusted accordingly.
Provisional sums account for both the item’s cost and any work related to installing or completing it, ensuring flexibility for items that are yet to be clearly specified.
Tradespeople can include a provisional sum in their response or costing for work elements that lack sufficient detail for precise pricing (e.g., estimating the cost of a bespoke kitchen before final designs are confirmed)
Good for:
Projects with multiple/more than one skilled tradesperson and where you are investing savings or getting a mortgage to cover the costs.
You can ensure that your whole scope is included and which costs may change. It’s worth asking if a ballpark range can be provided which can help with your costings and expectations.
Beware
Where a lump sum (total price) contract provides a provisional sum the final amount payable will be adjusted to reflect the actual cost of the work.
As the unknowns become known, ensure you discuss solutions and cost / time impacts with your builder before they continue work or racking up costs.
Your contract needs to stipulate that the tradesperson must provide options for each solutions and time/cost impact for each, this will enable you to ask further questions and make an informed decision; and that the tradesperson is not to proceed until they have received formal instruction to do so.
When making a decision, make a note of the conversation details and your decision/instruction and follow up in writing each time.
Prime Cost (PC) (Not recommended)
A PC Sum is a budget set by the Quantity Surveyor or client for the supply-only cost of materials or goods. For example, if you know the area of tiles needed for a bathroom, you might allow £35/m² for tiling. PC Sums are used when the exact quality or specification of materials is unknown at the time of pricing.
Traditionally, they cover only the cost of the item itself, not related work such as installation. PC sums are used when the exact type or quality of materials isn’t decided yet.
Good for:
Large projects where the design is not finalised yet or where the customer has ordered elements of the project (ie: you bought the bathroom suite)
Beware
This is a high risk option for a domestic project.
A PC sum excludes the cost of labour installing or working with those materials.
Make sure you get labour cost estimates included in the cost proposal.
This route will require close cost management throughout the entire project as there is a risk of costs spiralling.
A PC Sum also comes with legislation that holds the customer responsible for the performance of a subcontractor instead of the responsibility being the main contractor. That means that the customer is held responsible for any delays caused by the sub contractor
Cost Proposal Assessment & Refinement
The cost proposal needs to show:
- The company address on the headed paper.
- The company registration number on the headed paper (Ltd Companies only)
- Their VAT No on the headed paper (only applies if they are VAT registered)
If the cost proposal has the above and you have not already done so, now is the time to carry out the list of checks you can do online:
If they pass the online checks and you want to proceed to a shortlist, ask for:
- Copies of certificates of their insurances.
- Formal building qualification certificates/proof of certification (applies to gas and electric)
- CRITICAL: Retention of 5% of the total quote until all certifications are signed off (ie: Building Control Officer), all work has been completed to a the satisfactory standard detailed in the scope (taking into account additional works/costs agreed and documented during the project). This protects your interests. It also ensures that all work is approved and appropriate before the tradespeople are paid and off site.
When to reject a quote
- When they fail any checks.
- If parts of the scope have been omitted from the quote.
- If they have overridden your specific requirements in the scope with their preferences
- If they are offering
- cash deals
- reduced prices for avoiding VAT (it’s illegal)
- booking you in earlier (high pressure/aggressive selling),
- limited time offers (high pressure/aggressive selling)
- If they use emotion to get you to agree (ie: “it would be better for Granny if you said yes as we can make the place lovely for her much faster”)
- If they refuse a retention fee for snagging / completion certificates.
- If they refuse to sign an agreement that they are Principle Contractor (thus will be held legally liable for rectifying defects 6-12 months after completion).
- If they want a deposit, ask why as there is no need for a deposit. (See Deposit Options and CAST’s advice)
- If their quote is missing the items listed under ‘The Quote needs to Show’ and they do not produce the information on request.
Top Tips
If the quote comes in higher than expected across all tradespeople there are somethings you can do as part of negotiations:
- Ask what standard the quote is based on (ie: if they quoted high end and you wanted basic).
- De-Scope (lower) your requirements.
- Split the project into must haves vs nice to haves. The Nice to haves can happen at another time
- Increase your budget.
- Do all of the above.
Agreeing Payments
Once you have refined your quote and selected your tradesperson you need to agree payments.
- The final sum needs to be put into the contract.
- Always agree the sum listed in the contract.
- Agree and document any Provisional Sums or Prime Costs as agreed between the parties
- Agree stages of payment (see below).
- Have a formal contract, which must include all key elements.
- If deposit required always pay on credit card.
- If you are paying for materials always pay by credit card.
Recommended Stage Payments.
- Foundations: A solid base that supports the house, influenced by the design, soil conditions, and load distribution
- Framing: The walls, doors, windows, flooring, and roof are erected, and a house wrap is applied to protect against moisture, rot, and mould
- Roofing: Trusses are often used to frame the roof, include all soffits, guttering, downpipes to create a dry building ‘envelope’
- First Fix.
- Electrical: removing existing wiring and installing a new, safety-approved system.
- Plumbing: running all required pipes to support the finished property and heating.
- Second Fix
- Electrical: Installs sockets, light fittings and switches.
- Plumbing: Installing bathroom suites, other sanitary ware and the central heating system.
- Interior finishing: The final stage of the construction phase includes plastering, decorating, kitchen installation and flooring finishes.
- Retention. Typically 5% of the total sum and a timescale for completion. Local authorities and building inspectors carry out regular inspections to ensure compliance with building codes and regulation, and produce certificate(s). Any final things that need finishing/sorting out need to be flagged for the builder to complete.
Note
There are so many possible variables for this page we are starting with the most common as a baseline.
As we hear feedback on different scenarios we can update this page accordingly.
Contracts
We currently have a gap in this area and are working to close it.
CAST recommends getting a contract in place and getting a contract lawyer to conduct this piece of work, particularly if you are using savings/taking out a mortgage to cover the work.
You will also be able to raise your concerns and any elements you want included in the contract, ensuring that wording is in place to protect you as much as possible.
While off-the-shelf contracts are available the more you are spending on your project the greater the benefit of seeking a tailored contract that represents your interests.
A contract will not stop a rogue. It will enable you to manage a good tradesperson and, if it goes wrong, ensure you can get rid of the rogue due to clear breach of contract. If you chose to progress to small claims it will clearly demonstrate where the contract was breached and with Trading Standards what the tradesperson had legally agreed to do vs what they actually did.
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