Restoration & Refurbishment

Contractor who refurbs BTL property - misspending of funds

Anonymous user 28/02/2024 - 3.02 PM

Hi - I have a newbie question which I hope you'll be able to help. I've recently started working for a very small property company which deals with property management and property search. Specifically the company finds clients properties that they wish to buy as BTL and then supervises the refurb and once this is done rents out and manages the properties. My boss has been using a person she terms a 'project manager' - he would appear to be a general builder who subcontracts to other tradesmen and oversees to a degree. There have been a number of problems with regards to completion times but the most worrisome is with regards to funding on several projects. I am not privy to the figures but it appears that he gets a certain amount of money up front for each project. He has a relationship with the owner of the company I work for who has used him for several years and on several projects but I'm not sure the way he does things is right. The issue is that as far as I can see he gets money for project A, which he then uses to finance another project (B) which has ground to a halt due to lack of funds, project A then doesn't have enough money to be completed so he comes back asking for more money and the works stall again. This seems to be a cycle whereby works stop on projects as there is no money and then he asks for more money to be paid to get them going again. A friend in the building industry said this was illegal and that he shouldn't be spending the money from project A on project B but should have some kind of float. I'm concerned by this guy for a number of reasons not least because he does not stick to completion dates! More worryingly my employer has started 'lending' him money so he can carry on with works that we have instructed him to do on behalf of clients. Is this as dodgy as I think? Also what would be a typical way of paying a 'project manager' type contractor with regards to percentages up front and along the way? I imagine that most works are under £20k but that some would go up to £50k+ My building industry friend said the only way to avoid being taken for a ride by someone like this guy is to pay for materials for the project ourselves out of the client's kitty and to pay for his individual contractors day rates - that way we could make sure the money was not being used for other projects. Like I said I'm a total newbie to this and on a steep learning curve but have joined a company that has been around a long while and where practices seem a little unhealthy. All thoughts gratefully received!! Thanks