Every landscape project should be carried out under a fully detailed, written, signed and agreed contract with both contractor and customer holding a copy for reference. The complexity of each scheme will vary, as will the cost. The format of the breakdown of the costings will depend on the ratio between various elements, including site set-up and clearance works, labour/tools & equipment and materials. These three primary sets of costs should be itemised separately by the contractor.
On small projects – say, under £5,000.00 excluding VAT, the normal breakdown would be 10% site set-up/clearance, 30% labour, tools and equipment, 30% materials and 30% profit and overheads. In such cases, any payment in advance is unlikely to affect the contractor’s cash flow, although some firms make such a charge as a matter of course. This advance payment is frequently referred to as a ‘deposit’, and will usually be in the region of 10% (say £500.00), and is required from the customer once they sign and agree the works, and once paid, the job is placed in the diary.
This is sometimes referred to as a ‘non-returnable deposit’. In the eyes of the Law, there is no such thing as a non-returnable deposit for landscaping works unless expressly stated in the contract. This term may be used when booking holidays and holiday let properties, although it is still erroneous if you examine the small print. All it means is that the firm offering the holiday retain the right to charge for any losses they may occur. If they are able to let the holiday to another person, their costs may be limited to administration only, with the balance reclaimable by the customer, although it may not be worth the effort of involving Court proceedings, should they decline to make repayment.
A deposit is a security for the contractor’s performance of the contract. If the customer changes their minds, and calls a halt to the project before any works have started, they are entitled to a full refund of their deposit.
To be clear, deposits are refundable unless the contract expressly states that fact, although in general terms, landscaping works are not to be compared with contracts regarding leases, property purchases or holidays etc. Non-refundable deposits are designed to prevent loss of profit for holiday companies or estate agents/house sellers who may lose out on a ‘chain’, to discourage frivolous orders. Be aware too, of The Unfair Terms in Consumer Contracts Regulations 1999, whereby a contractual term shall be regarded as unfair if it causes a significant imbalance arising under the contract to the detriment of the consumer.
(In my many years working in Court’s disputes as an expert witness, I have seen some very ‘inventive’ Terms and Conditions produced by contractors, that effectively remove all rights from the client. Such clauses would never to allowed to prevail in a Court)
In order to avoid any misconceptions or misunderstandings, if instead of asking for a deposit, clearly state in your Terms & Conditions and in the contract text, that you require a mobilisation payment of £XXXX, payable with order.
A mobilisation payment request is not necessarily a percentage of a contract price. There may be many factors that render a blanket figure irrelevant. On larger projects, or those with a higher monetary value on materials, especially those that the contractor will never use again, bespoke to that job and ordered by the designer/customer, it may be necessary for all or most of the material cost to be paid in advance of the actual work dates programme.
(Certain garden features such as an out-door kitchen, hot-tub, glasshouse, shed/cabin, barbecue etc, should be ordered and paid for by the customer, as there will be little or no profit available to the contractor. In any event, such products will have manufacturers guarantees, which will be in the name of the customer, and should not be part of the main contract. See ‘Client’s Supplying Materials’ elsewhere in The Landscape Library)
Therefore, the amount of money that may be invoiced, plus VAT, in the mobilisation payment request will depend on the likely out-of-pocket spend the contractor will have to pay to order the ‘special’ materials. A large order of paving, in a particular colour, from a certain supplier that the contractor does not have an account with, should be paid for in advance of the works, and included in the mobilisation payment.
In all such cases, a sum should be added to the mobilisation payment even if it is higher than the standard 30% percentage rate on a ‘standard’ contract, to cover the cost of the bespoke materials.
Another important factor when working on a mobilisation payment regime, is that all monies expended on organising the project – from office time, involving ordering machinery and equipment, additional labour, booking permits and dispensations (if necessary), site meetings and research – may be costed and charged against the mobilisation payment in the event of a cancellation. Any money spent on organising the scheme may be retained, as long as this is made clear in the Terms & Conditions of Contract. These expenses should be logged and recorded, together with dates and times for future reference.
In the vent of a cancellation, all materials that have been ordered by the contractor for the project will remain the property of the customer, who will be responsible for handling those products, storing them and protecting them, as they will in fact own them. Once the contract has been terminated, and any surplus money left over from the mobilisation payment and expenditure by the contractor has been returned to the customer, that is the end of any involvement or liability by the contractor.
As always, the devil is in the detail. Check your Terms and Conditions carefully and be aware of the terminology of all contract discussions, and do not allow the customer to use the term ‘deposit’ to avoid any misunderstandings in the future.