Friday, January 08, 2010

Types of Contracts and Agreements - Build and Make Part 3

Links to my previous posts
Part 1
Part 2

It is very important to know different types of agreements and contracts while building house. You need to have agreements with Architect and builder. And with any other parties if you directly deal. It is preferred to have all the agreements in writing. Few small agreements can also be oral. But with architect and builder I suggest to have a written agreement. Following are the high level items to be taken care in the agreement.
  • Scope of work - What is covered and what is not covered in the work
  • Time - Schedule deliveries
  • Total cost or item rates or estimations etc
  • Payment modes, payment frequency
  • Criteria of completion - When do you consider the work is completed

With builder there are several types agreements

  • Full contract (Turn Key contract) - You tell builder to build your house as per your basic requirement. In this case you have very less options or choice. Builder has all the risk of managing cost, scope, schedule and any type of coordination. But at the same time, builder has highest profit margin. Owner has very less control in this case and as well as very low risk. Usually this kind of agreement is suitable, if owner is not in the town of construction or if owner is not too specific about the way how this are built. Another situation where builder has built similar houses (may be flats or something like that) in prior. In this case builder takes care of all the major areas of construction - Civil, Carpenrty, Flooring, Electrical, Plumbing, Painting, Fabrication etc
  • Labour contract - In this case, builder provides only Labour. It might include all areas of construction as mentioned above but only difference is that, owner has to provide all the raw materials like - Sand, Brick, Cement, Pipes, Wires, Fixtures, Wood and other fittings. In this case owner has medium risk and builder also has medium risk. But the problem would be of coordination. If owner is new in this construction industry, it might be a big challenge in buying raw materials. Negotiating quality/ cost / supply with suppliers will be again a challenge, if owner is newby in this industry. There might be a lot of chances of getting cheated by suppliers, middlemen sometimes also by contractors.
  • Blend of above two : In this case, you give full contrat to the builder but not turn key. Owner keep few areas for choice during the final stages. Major areas of Civil, Carpentry etc would be done completely by builder and he gives options for owners for selecting colors, quality and others for fittings, paint colors, vinear/lamination selections during final stages. Any differencial cost will be adjusted later. Here owner gets benifit of "his-choice" during finishing stages with some "Cost" invovled.
  • Item rate billing: In this case, arhcitect plays a major role. Owner and architect have multiple sittings/ meetings during planning stage and arhictect provides a exhaustive list of specifications of each areas. This is called as SOQ - Statement Of Quantities. He gives a complete list of items and quantities to be used for building. Builder quotes his price and provides estimation for the entire house for the provided specification. Owner can get the quotation from multiple builders and select the best preffered one based on cost, prior experience or any other factors.
    Once the project execution is started, its Architect responsibility to check the quality as per specification and approve the bill provided by Builder. Once approved, the payment would be done to the builder by owner at multiple stages.
    In this case cost would be more. In terms of Architect fees etc. But highest quality levels are achieved, with lowest risk to the owners as well as builder. Builder also can have his profit transparent so that it is a WIN-WIN situation to all.

Mine was Item rate billing. I figured out a new risk of clashes between architect and builder :). I had to smooth them several times. But over all I am very happy with this model, as well as with my arhictect and with my builder.

Wednesday, January 06, 2010

Its all about planning - "Build and Make" Part 2

Welcome back folks. This article is continuation of my series of posts regarding experiences of building house in Bangalore

Link to Part 1

It is very important that you spend very good amount of time for planning your house. Better to get it planned by an experienced Architect. Finding a good architect is again a challenge. Better is through reference, as if happened to me. One of my good friends and colleague Harinath suggested his Architect - Sathya Prakash Varanasi. My wife and I just called him and got an appointment and met him one fine day. We had still not decided when to start building. It was Oct 2008. Sathya gave a big list of houses he had built and asked us to go and visit them. This was before even discussing what kind of house we need. It is very important to apply your mind and imagine your self in the new home starting from day one to D-day. Better you can imagine, greater will be the output. Its all about thinking and a lots and lots of common sense.

Any architect will ask you few basic questions without which he will not be able to design a house for you.
  1. What is your budget - Usually you dont know what he is talking about. Its tooo early to decide. Isnt it ? But you should definitely know what is the maximum money you can spend on it
  2. What do you need in your house : This is mostly like - A living, A drawing, A Dining, A Kitchen, A Foyer, A court yard, A pooja, A Car porch, A Garden, A swimming pool, A Library, A Study room, A sit out, A jagali, A stilt, A Balcony, A rental unit and a number of Bed rooms and bath rooms. You need to really think what you definitely need and what your really don't need. Usually an Architect will study your lifestyle, your needs, your site characteristics and designs accordingly. But its YOU who should make him design what YOU need. As per me- An Architect is a facilitator for planning, executing the project of making your home. If an architect forces you to accept his design, he is a very poor at his profession. Good designer gets into an interrogation mode and asks you a lot of questions before even starts to write any lines on paper. Few questions really put you into too much of deep thinking that you have to really think for days and discuss with all family members to answer him.
  3. Observe: Have you really observed what is compound design of your neighbor ever? Have you really seen deeper what kind of flooring that your friend has done? What could be the dimension of your cousin's bed room ? I am sure, if you have never built a home, you would have not observed them. You have to observe a lot before planning your home. Building a home transforms you, for sure.
  4. When do you need your house: This is another important factor. Time. If you have a deadline you need to discuss during planning stage itself. But I would suggest to have no constraint over time. Mine took almost a year starting from execution. More than a year starting from planning
  5. Any other constraints and Discussion: THINK about any other constraints, like - Cost, Schedule, Number of rooms, Rental unit, Income from your home, Home loan, EMI pay backs, Parking lot, Garden.
  6. THINK about site conditions: Less light, less Air, Water, Slope on wrong side, Un-even dimensions, Uneven surfaces, Corner, Dead end sites. All these factors your should keep in mind while designing
  7. THINK about what materials to use. Whether you need to use bricks, cement blocks, hallow clay blocks, wire cut bricks, stones, mesh walls. What kind of doors and windows you go with - Wood, if so which wood. Fiber, Steel and many new materials that are coming up in market. Discuss about flooring options - Granite, Wood, Marble, Clay tiles, Ceramic tiles, Vetrified tiles etc. You need to discuss pros and cons of all.
  8. THINK of 6 factors always -> Cost, Aesthetics, Safety, Durability, Maintainability, Usability
  9. As a ball park estimate keep at least 3 to 4 months just for planning. And have as much discussions as possible with your family members and your architect. Be a THINKer, OBSERVer, MANAGer
During planning stage, there are few other things that comes into picture.
  • Agreement with Architect and fees: There are many ways that architect charges you the fees. Better to fix the amount based on ball park estimate and agree to it on paper. I suggest that it should not be based on the total amount of expenditure. If that is the case, there might me chances that architect tries to enlarge your cost so that he can make more money. My architect did a ball park estimate and fixed 5.5% of that amount as his fees. There were 6 parameters he considered to arrive at the figure. It is pretty accurate, I am realizing now :)
  • Selection of Contractor: This is another important stage. Most of the times architect would suggest the contractors that they have been working before. Its good to choose one. So that they both are in synch. But the risk is, both can make a team and deeply fry you by increasing the cost. If you have another contractor the risk would be that Architect and Contractor might not go well.
If you know Edward Deming's Quality model, apply it.. PDCA - Plan Do Check and Act. Planning is everything about building new home. Because it reduces a lot of re-work.

Tuesday, January 05, 2010

Build and Make - Experience sharing

There is a saying in Kannada - "
Mane katti nodu, maduve maadi nodu
which means, Experience building home and Perform a marriage function. Both are not-so-easy tasks in India.

I started the project of making our sweet home a few years back. Spent more than a year in search of good plot and finally got a plot in Padmanabhanagar. But I can say at that moment we had nothing in our mind regarding our home. We just bought a plot.

After around two years when our finance got little stabilized, many close relatives forced us to build a house. It took around 4 to 6 months to decide whether to build at that moment not. It's in Oct 2008, that we decided to build and make our new home.

Now that our sweet little home is almost ready, I wish to log all my experiences during making of the same. It might be useful for some of you who want to build and make your new home :)

It will be a series of posts that concentr