Risks of Kickbacks in Project Building: What to Know

This is another contentious issue that is extremely hard to prove yet I am certain still exists in project building. You may ask why I bring up this point. Well, I believe that it is not right. To begin with the tradesman does not have a certain supply of work. A successful tradesman will be successful because of the quality of work they do, their ability to turn up on time, their ability to do the job within the time and cost allowed to them.

A building supervisor is paid to perform their job and to build the home to company display standards. As soon as money begins to change hands in this process all sorts of problems occur. To begin with the best trade may not be doing the best job for the building company and in turn the client.

Secondly, greed clouds the decision making ability of the builder/building supervisor. This in turn will create conflict and distrust amongst the other building supervisors as whilst they may not be able to prove what is happening they will certainly notice abnormalities with the labour allocation. This situation is unavoidable.

Another area where this commonly occurs is amongst salesman. Beware the salesman who is quick to put together a “package” consisting of carpet, main floor tiles, blinds, landscaping, air-conditioning.

Again, they will convince you, the client, that you are going to save heaps by not putting these items in your building contract. On the other hand the subcontractors they are using to perform this work will be cut price, may not be licensed.

The Salesman is quick to suggest such a super package deal to you for the mere fact they are picking up a sizeable backhander from the trades or suppliers providing the service/products to you.

When in doubt and you think that you are involved in this situation just ask the salesman “Are you getting a rebate for providing this?”. Keep in mind as you ask this question that the salesman does get paid a sales commission by the building company that they are attached to. The size of the sales commission is linked to the size of the contract value.

So, using simple logic, the more you include in your package with the builder, the more they stand to make. So why then tell you to remove items that would otherwise be contracted out and covered by the Builder under their representations and warranties?

Greed!

They are probably making a few dollars more this way. They also have no interest in the quality of work being performed they just want the work done so they can get their kickback.

My thinking about this process was this. At what point does this behaviour start and stop? I mean as a builder/building supervisor you have a multitude of clients constantly asking you for names and numbers of trades to perform additional work. It would be easy pickings for the builder/supervisor to ask for kickbacks for such referrals. Yes you would make extra money but at what cost. I firmly believe that as soon as you begin this behaviour the balance of power in providing a quality product and service shifts to the person paying the kickback. They are now in a position to manipulate the builder/supervisor at whim.

Who has the most to lose in the event that the kickback arrangement came to light? The person receiving the money. The money giver could easily argue that this was necessary to ensure work and that it was demanded from them. They were merely obliging and looking out for their own interests & competitive advantage.

So the moral of this story is this: be wary of gift givers when it comes to “you’ll save money”, “we always do this” & “I only recommend so & so because we’ve worked together in the past” for package deals offered by salesman when your building your new home.

There is always another reason why these relationships exist. Ask questions, dig deeper and look & listen for awkward responses and replies.