We are often shocked by the behaviour of unscrupulous renovation service providers and contractors in South Africa. Smarten Renovate has expressed its opinion on this matter in the past (see other articles on this page), in which it warns against among others, contractors who put pressure on homeowners for start of work; those who continuously ask for more money; those who keep on finding excuses for work not done satisfactorily; and those whose sites have no supervision. Unfortunately, as in all industries, one does find dishonest and unprofessional home improvement contractors. That having been said, the vast majority of renovation contractors in South Africa are honest, hardworking people who merely wants to provide a service and make a living. This, of course, means that they also have risks, both personal and in business.
The one enduring issue that has been with us for many years is whether contractors should ask for a deposit before commencement of work in a renovation project. There is a school of thought which believes that the property owner carries all the financial risk on a project, especially in the initial stages. We believe differently. Consider this scenario: the property owner pays a minimal deposit (say, 10% of the contract value) or no deposit at all. The contractor starts work. Initial expenses include transport to and from the site, wages, material, equipment, communication expenses etc. Very soon a substantial amount of money has been spent. The property owner then decides that the entire scope has to change, or that work on the project must stop, or that he or she does not want the specific contractor to continue for whatever reason. The problem is that the contractor will never be able to recover the capital spent from his own pocket, because each project should finance itself. We contend that the risk is at least 50/50, and therefore a 50% deposit before commencement is not unreasonable. If the project demands huge amounts of expensive material, an even bigger deposit is also reasonable.
Another risk that haunts renovation contractors is the risk of time. Most contractors provide a property owner with a duration estimation at the start of a project. This estimation should be based on proper project management calculations, but is also dependent on several factors. One of these factors is that the scope of the project should be consistent as far as possible. We often find that property owners change their minds at any stage of the project, or that additional work is added but that the expectation is still that the project should be completed in the original time-frame. What also often happens is that the contractor is dependent on the property owner for cooperation in certain matters, for example the owner often purchases the sanitary- and decorative ware himself because of the personal element involved. If the material is not on site as agreed with the contractor, or if a property owner cannot make a decision on what material should be used, it has the ability to set back the entire project because of the interdependencies of all the factors of a project.
Besides these risks, the contractor is constantly exposed to other risks as well, such as environmental (rain, snow), logistic (labour transport, availability of equipment), and socio-economic (crime, illness).
We believe that the two most important elements that should be present in all renovation projects are:
· Trust. Not blind trust, though. Trust goes both ways, but it should be verified. Before you pay a deposit, do some research on the service provider. Check references, go to sites, verify legitimate status.
· Coherence in expectations. Your expectations as the property owner and the expectations of the service provider should be as close a match as possible. This will mean careful planning and constant communication.
If communication fails, a renovation project fails, period. Everybody is very excited at the start of any project, but if the communication is insufficient or ineffective, things can get really ugly really soon. Regular site meetings are non-negotiable. Regular reports with photos are a given. Regular snag analysis and snag repair is a must. Only through open communication and trust (by implication also honesty) can the risks on both sides be minimised and the project completed according to the expectations of all the stakeholders.