Browse Forums General Discussion 1 Jun 16, 2011 2:48 pm Regarding types of contract, I recently read a recommendation by the ed, saying: "So the higher the cost, the more he makes [re cost plus]... where's the incentive to reduce cost? I would be going for fixed cost with rise and fall. These days commercial builds often have a fixed cost plus a share of any cost saved - for obvious reasons." My questions are, where does the "rise and fall" component come from, and how can there be a cost saved (which is shared by the builder and client) on a Fixed Price contract? Re: Rise and Fall in a contract, and potential to save. 2Jun 16, 2011 4:17 pm From Tom again: Ok, I've worked out where the Rise and Fall component comes into play. However, RE sharing any cost saved, I'm not sure where there would be any incentive to a builder to save any costs on a Fixed Cost contract. Eg if the arrangement is to split 50/50 the cost saved, what's to stop the builder simply pocketing the full saving for him/herself, in which case they get 100% of the 'cost saved'? Re: Rise and Fall in a contract, and potential to save. 3Jun 16, 2011 5:21 pm Most housing contracts are mainly fixed price particularly the big builders on project homes where the the majority of the costs are well known. The two areas of variable price and possible savings are: Prime Cost Items This is where a builder makes an allowance for a particular standard of fixture and fitting. If th eitem you choose is cheaper you make the savings Provisional sums Generally used to cater for the possibility of a certain volume of rock on the site. No rock, or less than the quantity you save. More rock and you pay extra. The Harder You Try - the Luckier You Get ! Web site http://www.anewhouse.com.au Informative, Amusing, and Opinionated Blog - Over 600 posts on all aspects of building a new house. All 3 items listed are defects and are of concern. Please seek qualified independent inspector and/or legal advice for your state. 1 8335 Just removed 40 liters of water in the span of 2 hours. Water fills up the hole just above the seepage point and doesn't overflow. 1 1000 I've just had a look at the website. The company are just building broker's. There are plenty of similar companies that basically draw your plans (they own them so you… 8 11353 |