The Devil’s In The (Lack Of) Detail

I’ve recently come to appreciate that good therapy can arrive in many forms and can count this column as a valued albeit surprising contributor to my mental well-being. Much of this has come about from me treating it as something of a confessional. For example, when I mentioned a guilty predilection for the sweeter things on a restaurant’s menu some months ago, I found a sympathetic audience waiting for me when I spoke at events up and down the country. It turns out that I was not alone; others also had a challenge with that most innocuous of questions, ‘Would you like to see the dessert menu?’. I know there’s nothing calorific about the menu card itself, but in my experience, it does tend to spark a chain of events where one thing leads to another.

Now, this outcome could quite easily have gone the other way. Rather than introducing me to some fellow sweet-toothed sufferers, my article could have prompted meeting hosts to ply me with bucket-loads of tiramisu at every event I spoke at. People would have said, ‘We’ve got Ritchie the Pudding King speaking next month. We’d better get a pastry chef in’, and then I’d be twice the size, but I suspect only half the man. And while there’s probably a part of me (mainly my stomach) that secretly (ok, blatantly) wants to stipulate a crème brûlée rider at every speaking gig, the reality is that meeting fellow sufferers has done me the world of good.

Unfortunately, having a sweet tooth isn’t my only vice. Another one I need to get off my chest is the fact that I really like a ‘deal’. I can’t recall the last time I purchased anything of any substance without negotiating a better price. I see it as a personal challenge, unlike my wife, who sees it as a source of acute embarrassment and refuses to go shopping with me. Don’t get me wrong; I don’t haggle in the supermarket, but don’t expect me to leave a car dealership or travel agent without first negotiating the deepest possible discount. I like to see the salesperson wince when we shake hands on a deal, and it has nothing to do with my grip strength

It turns out that, just as with my dessert affliction, I am not alone in liking a great deal. When I speak to our property developer students, I know many also possess the same deep urge to get a discount. They don’t usually like to talk about it, but when it comes to developing property, it doesn’t take long before this affectation can land them in a spot of bother.

A typical scenario arrives thus; they’ve engaged the services of a main contractor to build out their project and a project manager to oversee things. So far, so good; this should leave our discerning developer plenty of time to do other stuff like play golf, test drive cars, or work on another business or day job.

But before they know it, they spot an advertisement telling them that Howden’s are doing a cheeky two-for-one offer on entry-level bathroom sets. And their ‘deal’ radar immediately goes into overdrive. They quickly do the maths; they’re building six flats, so they’d effectively get three bathroom sets for free. And the offer is only good until this Sunday! Before they know it, they’ve borrowed a mate’s Sprinter, headed down to the big ‘H’, handed over some cash, and then delivered half a dozen shiny new bathroom sets to their contractor’s site office.

Now, the deal addict in you might be thinking, where’s the problem? They almost certainly got the baths cheaper than their contractor, so they’ve saved some cash. And who doesn’t like a trip to Howdens? Or driving someone else’s Sprinter, for that matter. Surely, it’s a win-win? Well, let’s look at things from the contractor’s perspective. They’d already secured a decent price for the bathroom sets from their usual supplier, albeit it included a small mark-up for themselves. So, now they’ve taken delivery of products that they didn’t order and which they will now have to handle and store and will also be making less money. And when it turns out the baths are the wrong size or some of the fittings are damaged, guess what happens next? Yes, your rather irritated contractor calls you to say that you need to get your sorry backside round to the site to pick up the bathroom sets and take them back to Howdens. Assuming your mate’s Sprinter is still available. And that Howdens will take them back. Whereas if you’d just let your contractor buy the materials in the first place, any fitting or quality issues would be down to them to sort out. You could have just stayed golfing or test-driving. Easy peasy.

So, the golden rule is don’t get involved – just let your contractor procure all the materials and leave the Sprinter van at home. But, while leaving everything down to your contractor, project manager, and design team is great in principle, there’s another critical area where your hand on the tiller is very much required. I’m talking about a rather important piece of paper in the developer’s armoury. It’s more about defence than attack, and it can be a critical tool for helping you get your projects costed correctly and keep them on budget. I’m referring to something called a Finishes Schedule, and it really can make a big difference when it comes to the profitability of a scheme.

Here’s how it works. When specifying how each room in every one of your newly constructed flats or houses will turn out, your architect will put together a document called a Finishes Schedule that tells the contractor precisely what they need to purchase and install, room by room. The key word in the previous sentence is (or should be) ‘precisely’, because it’s the absence of detail that can cause huge problems for the developer down the line and can quickly erode their profitability. Now, you will almost certainly have a mental image of how you want each room to look, particularly regarding the quality, fit, and finish. The problem arises due to the question: when is a door not a door?

It’s not a joke – there are doors, and then there are DOORS. But which type of door do you want on your project? You may be imagining the solid oak jobs that you saw in Country Living with burnished steel handles and three chrome hinges, but what exactly does it say in your Finishes Schedule? If a quick look reveals something like ‘supply and fit 2no. doors with fittings in the lounge of Unit 1’ then there’s every chance you’ll be in for a nasty surprise. Because your contractor, who has quoted a price based on your schedule, will not be thinking about burnished anything. Instead, their question will be, ‘How can I spend the least amount of money possible and still achieve the required specification?’. In the example above, the answer is obvious. They’ll install two doors that resemble reinforced cardboard, with cheapo door handles straight out of a 1970s educational institution and only two hinges, neither of which have been within a mile of a chrome platers. Then, when you turn up to inspect the fruit of their labours, the uncomfortable truth will dawn. There are doors. And then there are doors.

Of course, your contractor will offer you a shoulder to cry on. Ever one for practical solutions, they’ll offer to rip out all of the newly installed reinforced cardboard doors and replace them with those swanky designer jobs that you saw in Country Living. In exchange, of course, for an additional fee to do the ripping out, disposal, and reinstallation, plus the additional cost of your new doors, handles, and hinges. You thought their quote was too good to be true, and now, at least, you have the satisfaction of knowing you were right.

This exposes another expensive truth: specifying upfront is usually much cheaper than changing things later or retrofitting. One of our students recently forgot to specify some doorstops that would prevent doors from swinging open and hitting walls, etc. It wasn’t a king’s ransom to solve in the scheme of things, but the cost of including it in the original specification would have been negligible. I recently spoke to a contractor who told me of a client who had decided to move the basin they’d installed in an ensuite from one side of the room to the other and had been taken aback by the additional cost. The fact that this had also involved re-routing the plumbing and waste from one side of the room to the other hadn’t occurred to them because they couldn’t see it. Yet it would have cost them almost nothing if they’d specified it that way at the outset. When it comes to detailing your projects, a little thought beforehand really can go a long way.

But the benefits of having a detailed Finishes Schedule don’t end there. If the subject of doors wasn’t riveting enough for you, spare a thought for your tiling. Let’s flick to the bathroom page of Unit 1 in your Finishes Schedule. We all know that you’ll want tiling in your ensuites. But what level of detail does your Finishes Schedule go into? Let’s consider the questions that your contractor will need to know the answers to when they’re pricing and fitting your bathrooms. Do you want marble, ceramic, or porcelain tiles? Are they smooth or bumpy? What colour are they? What size are they – small mosaic ones or much larger jobs? Are they square or rectangular? If rectangular, are they to be laid portrait or landscape? What colour grout is to be used? Where on each wall does the tiling come up to? Do you want to tile to the floor behind the basins?

Hopefully, you can see another saving coming your way, and this one is in time. Not only would specifying this information in the Finishes Schedule ensure that you don’t end up with the cheapest tiles in the world finished with day-glo grouting, but it will also mean you don’t get a barrage of questions from your contractor, which will take up a lot of your time. Poor specification is one of the biggest frustrations for everyone because it means they’ll need to ask you for clarification. Or they’ll crack on with what they think is cheapest/best and assume you’ll be happy with it. Either way, it’s a significant risk for you as the developer and one that you shouldn’t take. The answer is to take the time to nail the requirement in the Finishes Schedule at the outset, and then your contractor can get on with things without constantly having to refer to you with questions. Better still, make a point of specifying the actual make and model of what you require. That way, there can be no ambiguity at all. It may take some extra time at the outset, but can pay big dividends.

There’s another secret weapon that can be brought to bear when specifying finishes, and it’s one that far too many developers write off as an unnecessary expense. I’m talking here about the much-maligned role of the Interior Designer. Why much maligned? Well, every man and his dog reckon they know how to design an entry-level flat. After all, you can take a quick shufti at a Barratt’s show home, and Bob’s your uncle. So why do you need to go to the expense of hiring an interior designer?

In reality, interior designers do far more than choose the paint and curtains. They can transform how a space works for the better and help you create a design blueprint that you can use on every project going forward.

This can be very cost-effective, as you can hire an interior designer for your first project and use the learnings from that on all your subsequent ones. It also makes life a lot simpler for you when it comes to your Finishes Schedule. If you’ve come up with a generic design template, you already know the specification of every component in it, and this means each Finishes Schedule virtually writes itself.

Property development is undoubtedly one the most highly leveraged business models there is; however, the developer shouldn’t spend all of their time on the golf course or in the car showroom. The devil lies not in the detail but in not paying enough attention to it. But get the detail right, and you should be well on track to reap the rewards.