Hello,
My builder has sent me an invoice for extra charges incurred for site excavation and slab costs with a reason that the actual cost has been higher than the Provisional cost for these items in the contract. He never spoke with us about the possibility of any additional costs before the slab was put. Some of the items included do not make any sense. What rights do I have. Who do I go and discuss. any advise would be greatly appreciated.
Thanks
Excavation and slab costs
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Its hard to make any comment without knowing the whole situation but.................Most contracts are based on the ground being exactly as the site geo-technical report with a limited amount of rock. This 'allows' the builder to claim extra if more rock is encountered or patches of bad ground are encountered during construction.
Its hard to make any comment without knowing the whole situation but.................Most contracts are based on the ground being exactly as the site geo-technical report with a limited amount of rock. This 'allows' the builder to claim extra if more rock is encountered or patches of bad ground are encountered during construction.
Thanks Bashworth. Our builder had quoted us certain amount for a P class slab and excavation work in the cotract. Both items were kept as provisional items. There has been no geographical change in the site. Excavation was carried out within 2 months of signing the contract. There was no discussion re extra work required while the excavation and the slab was being put. Now we have received an invoice stating a variation in contract where we are being charged extra for excess excavation cost and cost of concrete.
Just want to understand where we stand with this and what rights do we have.
Thanks Bashworth. Our builder had quoted us certain amount for a P class slab and excavation work in the contract. Both items were kept as provisional items. There has been no geographical change in the site. Excavation was carried out within 2 months of signing the contract. There was no discussion re extra work required while the excavation and the slab was being put. Now we have received an invoice stating a variation in contract where we are being charged extra for excess excavation cost and cost of concrete.
Just want to understand where we stand with this and what rights do we have.
Just want to understand where we stand with this and what rights do we have.
Because it is a provisional cost and you have signed the contract stating you have read and understand the contract, you are liable to pay the amount they have charged.
Your builder SHOULD have called you when they found out and told you, but they don't have to.
On your engineering papers it will have said if X is found to be out of scope then adopt Y as the design.
Unfortunately the only way around this scenario is to have fixed price site works which usually are more than the norm so the builder has a buffer to work with for their margin.
FWIW the clause about variations not accepted or authorized does not apply in this case (So I was advised by Consumer affairs, they could have got it wrong though) as it is noted as a provisional cost.
How much extra are they after?
Thanks Bashworth. Our builder had quoted us certain amount for a P class slab and excavation work in the contract. Both items were kept as provisional items. There has been no geographical change in the site. Excavation was carried out within 2 months of signing the contract. There was no discussion re extra work required while the excavation and the slab was being put. Now we have received an invoice stating a variation in contract where we are being charged extra for excess excavation cost and cost of concrete.
Just want to understand where we stand with this and what rights do we have.
Just want to understand where we stand with this and what rights do we have.
Because it is a provisional cost and you have signed the contract stating you have read and understand the contract, you are liable to pay the amount they have charged.
Your builder SHOULD have called you when they found out and told you, but they don't have to.
On your engineering papers it will have said if X is found to be out of scope then adopt Y as the design.
Unfortunately the only way around this scenario is to have fixed price site works which usually are more than the norm so the builder has a buffer to work with for their margin.
FWIW the clause about variations not accepted or authorized does not apply in this case (So I was advised by Consumer affairs, they could have got it wrong though) as it is noted as a provisional cost.
How much extra are they after?
Almost double the amount they had quoted as provisional sums. If it is a due and a just amount we have no issues to pay but the builder is charging us for the concrete they have poured. The attachments he is providing to the invoice is the quote he received from the sub-contractors when the contract was being signed. Should he have not mentioned the actual cost in Provisional sums.
if site cost is provisional in the building contract you will then need to pay for the invoice.
saying so you also need to find out what are the extra charges and compare it against your engineering report so to work out if those extra charges are correctly applied.
some builder on the market offering "fix site cost" are not really fix, watch out for fine print.
saying so you also need to find out what are the extra charges and compare it against your engineering report so to work out if those extra charges are correctly applied.
some builder on the market offering "fix site cost" are not really fix, watch out for fine print.
Your builder SHOULD have called you when they found out and told you, but they don't have to.
Domestic Building Contracts Act 1995 - SECT 23
23. Builder must supply evidence of cost of prime cost items and provisional sums
A builder must give the building owner a copy of any invoice, receipt or other document that shows the cost to the builder of any prime cost item, or that relates to any provisional sum, in a domestic building contract and must do so as soon as practicable after receiving the invoice, receipt or document.
Penalty: 20 penalty units.
Domestic Building Contracts Act 1995 - SECT 21
21. Requirements concerning prime cost item and provisional sum estimates
(1) A builder must not enter into a domestic building contract that contains an amount, or an estimated amount, for-
(a) a prime cost item that is less than the reasonable cost of supplying the item;
(b) a provisional sum that is less than the reasonable cost of carrying out the work to which the sum relates.
Penalty: 35 penalty units.
(2) This section does not apply to items or sums that are to be supplied or specified by the building owner (or the building owner's agent).
(3) In determining what is a reasonable cost, regard must be had to-
(a) the information that the builder had, or reasonably should have had, at the date the contract was made; and
(b) the nature and location of the building site.
Domestic Building Contracts Act 1995 - SECT 22
22. Details of prime cost items and provisional sums must be set out in writing
If a domestic building contract provides for any prime cost items or provisional sums, the builder must not enter into the contract unless-
(a) in the case of a major domestic building contract, the contract contains a separate schedule for each item or sum that sets out-
(i) a detailed description of the item or of the work to which the sum relates; and
(ii) a breakdown of the cost estimate for each item or sum (showing at least the estimated quantities of materials that will be involved and the unit cost to the builder of the item or sum); and
(iii) if the builder proposes to charge any amount in excess of the actual amount of any increase to the item or sum, how that excess amount is to be determined;
(b) in the case of any other contract, the builder gives the building owner before entering into the contract a written document that sets out for each item or sum the information required by paragraphs (a)(i), (ii) and (iii).
Penalty: 50 penalty units.
21. Requirements concerning prime cost item and provisional sum estimates
(1) A builder must not enter into a domestic building contract that contains an amount, or an estimated amount, for-
(a) a prime cost item that is less than the reasonable cost of supplying the item;
(b) a provisional sum that is less than the reasonable cost of carrying out the work to which the sum relates.
Penalty: 35 penalty units.
(2) This section does not apply to items or sums that are to be supplied or specified by the building owner (or the building owner's agent).
(3) In determining what is a reasonable cost, regard must be had to-
(a) the information that the builder had, or reasonably should have had, at the date the contract was made; and
(b) the nature and location of the building site.
Domestic Building Contracts Act 1995 - SECT 22
22. Details of prime cost items and provisional sums must be set out in writing
If a domestic building contract provides for any prime cost items or provisional sums, the builder must not enter into the contract unless-
(a) in the case of a major domestic building contract, the contract contains a separate schedule for each item or sum that sets out-
(i) a detailed description of the item or of the work to which the sum relates; and
(ii) a breakdown of the cost estimate for each item or sum (showing at least the estimated quantities of materials that will be involved and the unit cost to the builder of the item or sum); and
(iii) if the builder proposes to charge any amount in excess of the actual amount of any increase to the item or sum, how that excess amount is to be determined;
(b) in the case of any other contract, the builder gives the building owner before entering into the contract a written document that sets out for each item or sum the information required by paragraphs (a)(i), (ii) and (iii).
Penalty: 50 penalty units.
My comprehension of the above would be as follows:
Domestic Building Contracts Act 1995 - SECT 21
21. Requirements concerning prime cost item and provisional sum estimates
(1) A builder must not enter into a domestic building contract that contains an amount, or an estimated amount, for-
(a) a prime cost item that is less than the reasonable cost of supplying the item;
(b) a provisional sum that is less than the reasonable cost of carrying out the work to which the sum relates.
Penalty: 35 penalty units.
The builder will most likely have sourced a quote for the work required based on the soil report and feature/contour survey. There are a lot of cases (mine included) where the reports and surveys are not accurate but this is often unavoidable and not usually due to mistakes but the nature of the beast. If you want to act on this point, you will have to prove that whoever provided the original quote was in error. That would be beyond difficult
(2) This section does not apply to items or sums that are to be supplied or specified by the building owner (or the building owner's agent).
(3) In determining what is a reasonable cost, regard must be had to-
(a) the information that the builder had, or reasonably should have had, at the date the contract was made; and
(b) the nature and location of the building site.
As above, the builder will have used soil reports and feature/contour survey data. When the time comes to set the levels for the foundations, that is when discrepancies are found. This is usually the worst time because the builder has usually had to organize other trades to be ready to go and delays can be costly.
Domestic Building Contracts Act 1995 - SECT 22
22. Details of prime cost items and provisional sums must be set out in writing
If a domestic building contract provides for any prime cost items or provisional sums, the builder must not enter into the contract unless-
(a) in the case of a major domestic building contract, the contract contains a separate schedule for each item or sum that sets out
(i) a detailed description of the item or of the work to which the sum relates; and
(ii) a breakdown of the cost estimate for each item or sum (showing at least the estimated quantities of materials that will be involved and the unit cost to the builder of the item or sum); and
(iii) if the builder proposes to charge any amount in excess of the actual amount of any increase to the item or sum, how that excess amount is to be determined;
The above section shows that the provisional and prime cost items need to be in the contract. If the owner has signed off on it, it means they agree that they understand the whole contract including the possibility that prime costs may not apply to the items the finally choose or that the provisional amounts may be higher or lower than expected.
For point iii:
The excess amount is usually determined by a tradesman's assessment of the actual situation on site when they are about to start the proposed works. They will then contact the person in charge and say something along the line of "Hey Jonno, Steve here. Mate this job at 134 Evergreen Terrace is going to need a heap more work than we thought. The soil here is just all fill and we're going to need piers and extra concrete for blindings. What do you want me to do?"
The part about the blindings or piers obviously doesn't mean much to the owner but its what the builder does from here that affects the owner.
From how I have read (and re read about 1000 times for my own build) the builder could just say replay "do what ever it needs" and then just pass on the costs including the margin he is entitled to (LOL) The only thing they have to do is provide the invoice and a description of why the works were required (in the builders opinion) They may also provide the existing engineering drawings and old quote as reference.
Domestic Building Contracts Act 1995 - SECT 23
23. Builder must supply evidence of cost of prime cost items and provisional sums
A builder must give the building owner a copy of any invoice, receipt or other document that shows the cost to the builder of any prime cost item, or that relates to any provisional sum, in a domestic building contract and must do so as soon as practicable after receiving the invoice, receipt or document.
Penalty: 20 penalty units.
As soon as practicable can be a very long time from the pouring of the slab unfortunately, as if the concreter doesn't provide the invoice to the builder in a timely manner this can be drawn out as well. I had this problem and ended up call the builders sub contractor concreter and demanded he send the invoice. And as you quoted, They should call you, but they don't have to do so. They can make the call to exeed teh provisional amount and pass on costs.
To the OP, How much was the original provision? double could be anything from $5k to $40k or more.
Also has the slab been poured or is it still awaiting your authorization? If it hasn't been done yet you may still have a chance to reduce costs and work out a deal.
We had some piering required and other issues with our foundations. The original provision was $15k, then I got an un expected phone call saying it could cost me up to $15k more(???) I was lucky that the builder had the courtesy to call and discuss how to move forward as it would have been a very expensive way to continue. We ended up sharing the cost 50/50 as our builder had overlooked a few areas of concern and it only cost us around $2k.
Domestic Building Contracts Act 1995 - SECT 21
21. Requirements concerning prime cost item and provisional sum estimates
(1) A builder must not enter into a domestic building contract that contains an amount, or an estimated amount, for-
(a) a prime cost item that is less than the reasonable cost of supplying the item;
(b) a provisional sum that is less than the reasonable cost of carrying out the work to which the sum relates.
Penalty: 35 penalty units.
The builder will most likely have sourced a quote for the work required based on the soil report and feature/contour survey. There are a lot of cases (mine included) where the reports and surveys are not accurate but this is often unavoidable and not usually due to mistakes but the nature of the beast. If you want to act on this point, you will have to prove that whoever provided the original quote was in error. That would be beyond difficult
(2) This section does not apply to items or sums that are to be supplied or specified by the building owner (or the building owner's agent).
(3) In determining what is a reasonable cost, regard must be had to-
(a) the information that the builder had, or reasonably should have had, at the date the contract was made; and
(b) the nature and location of the building site.
As above, the builder will have used soil reports and feature/contour survey data. When the time comes to set the levels for the foundations, that is when discrepancies are found. This is usually the worst time because the builder has usually had to organize other trades to be ready to go and delays can be costly.
Domestic Building Contracts Act 1995 - SECT 22
22. Details of prime cost items and provisional sums must be set out in writing
If a domestic building contract provides for any prime cost items or provisional sums, the builder must not enter into the contract unless-
(a) in the case of a major domestic building contract, the contract contains a separate schedule for each item or sum that sets out
(i) a detailed description of the item or of the work to which the sum relates; and
(ii) a breakdown of the cost estimate for each item or sum (showing at least the estimated quantities of materials that will be involved and the unit cost to the builder of the item or sum); and
(iii) if the builder proposes to charge any amount in excess of the actual amount of any increase to the item or sum, how that excess amount is to be determined;
The above section shows that the provisional and prime cost items need to be in the contract. If the owner has signed off on it, it means they agree that they understand the whole contract including the possibility that prime costs may not apply to the items the finally choose or that the provisional amounts may be higher or lower than expected.
For point iii:
The excess amount is usually determined by a tradesman's assessment of the actual situation on site when they are about to start the proposed works. They will then contact the person in charge and say something along the line of "Hey Jonno, Steve here. Mate this job at 134 Evergreen Terrace is going to need a heap more work than we thought. The soil here is just all fill and we're going to need piers and extra concrete for blindings. What do you want me to do?"
The part about the blindings or piers obviously doesn't mean much to the owner but its what the builder does from here that affects the owner.
From how I have read (and re read about 1000 times for my own build) the builder could just say replay "do what ever it needs" and then just pass on the costs including the margin he is entitled to (LOL) The only thing they have to do is provide the invoice and a description of why the works were required (in the builders opinion) They may also provide the existing engineering drawings and old quote as reference.
Domestic Building Contracts Act 1995 - SECT 23
23. Builder must supply evidence of cost of prime cost items and provisional sums
A builder must give the building owner a copy of any invoice, receipt or other document that shows the cost to the builder of any prime cost item, or that relates to any provisional sum, in a domestic building contract and must do so as soon as practicable after receiving the invoice, receipt or document.
Penalty: 20 penalty units.
As soon as practicable can be a very long time from the pouring of the slab unfortunately, as if the concreter doesn't provide the invoice to the builder in a timely manner this can be drawn out as well. I had this problem and ended up call the builders sub contractor concreter and demanded he send the invoice. And as you quoted, They should call you, but they don't have to do so. They can make the call to exeed teh provisional amount and pass on costs.
To the OP, How much was the original provision? double could be anything from $5k to $40k or more.
Also has the slab been poured or is it still awaiting your authorization? If it hasn't been done yet you may still have a chance to reduce costs and work out a deal.
We had some piering required and other issues with our foundations. The original provision was $15k, then I got an un expected phone call saying it could cost me up to $15k more(???) I was lucky that the builder had the courtesy to call and discuss how to move forward as it would have been a very expensive way to continue. We ended up sharing the cost 50/50 as our builder had overlooked a few areas of concern and it only cost us around $2k.
Confused Much - Pick Me !!
As we are getting closer to committing to a builder they have changed their site work allowance from $22.5K to a Fixed Cost of $14.7K for 'fixed footings and site costs'.
They have had the use of a soil report from Day One to do their homework so there may be some validity to this change in tactic or is it a sales technique to make you perceive that they have reduced your costs. After all we are talking a 35% redction to their Allowance all of a sudden
I assume given we are doing a 7 x 3.4m pool that will be set 600mm from two piers to the Alfresco that they have also taken that in to consideration.
Not quite sure if I feel comfortable with the fixed cost as has been stated given the likelihood of Builder 'margin' being built in to this that we will never recoup.
Does anyone have any thoughts or suggestions how to approach this.......just want to make sure we are not walking through a smoking mirror !!!
As we are getting closer to committing to a builder they have changed their site work allowance from $22.5K to a Fixed Cost of $14.7K for 'fixed footings and site costs'.
They have had the use of a soil report from Day One to do their homework so there may be some validity to this change in tactic or is it a sales technique to make you perceive that they have reduced your costs. After all we are talking a 35% redction to their Allowance all of a sudden
I assume given we are doing a 7 x 3.4m pool that will be set 600mm from two piers to the Alfresco that they have also taken that in to consideration.
Not quite sure if I feel comfortable with the fixed cost as has been stated given the likelihood of Builder 'margin' being built in to this that we will never recoup.
Does anyone have any thoughts or suggestions how to approach this.......just want to make sure we are not walking through a smoking mirror !!!
I had and extra $17,000 cost for slab and piers but the builder informed me of the cost even before the final signing of the contract so no suprises after signing.
The extra $17k was for piering 10 x 8mts deep on one side of the slab then decreasing depth piers 6mtr ,4mtr toward the center of the slab plus root barriers.
The extra $17k was for piering 10 x 8mts deep on one side of the slab then decreasing depth piers 6mtr ,4mtr toward the center of the slab plus root barriers.
I think zeitgeber's input is most relevant however I would like to add and argue that the builder is in breach of warranty of section 20
s20. Warranty concerning provisional sums
(1) This section applies if a builder enters into a domestic building contract.
(2) The builder warrants that any provisional sum included by the builder in the contract has been calculated with reasonable care and skill taking account of all the information reasonably available at the date the contract is made, including the nature and location of the building site.
Furthermore as professional quantity surveyor (not registered) I can tell you that it is most likely that the quantities have been overstated as it it unlikely they have been measured in accordance with The Australian Standard Method of Measurement
Many people won't spend few hundred dollars to have builder's claims professionally checked so instead they get ripped off thousands. perhaps tens of thousands. What else can I say?
s20. Warranty concerning provisional sums
(1) This section applies if a builder enters into a domestic building contract.
(2) The builder warrants that any provisional sum included by the builder in the contract has been calculated with reasonable care and skill taking account of all the information reasonably available at the date the contract is made, including the nature and location of the building site.
Furthermore as professional quantity surveyor (not registered) I can tell you that it is most likely that the quantities have been overstated as it it unlikely they have been measured in accordance with The Australian Standard Method of Measurement
Many people won't spend few hundred dollars to have builder's claims professionally checked so instead they get ripped off thousands. perhaps tens of thousands. What else can I say?
Building Expert can I ask a question off topic.
How come you’re not register Building Surveyor, is it because you have retired?
Another thing I can add to the topic, I think sometimes builders are in the best position to forecast costs as they are building these things day in day out. Where a building surveyor is most likely relying on a quantities publication that is printed maybe only quarterly that doesn't equate for local supply and demand factors.
How come you’re not register Building Surveyor, is it because you have retired?
Another thing I can add to the topic, I think sometimes builders are in the best position to forecast costs as they are building these things day in day out. Where a building surveyor is most likely relying on a quantities publication that is printed maybe only quarterly that doesn't equate for local supply and demand factors.
Hi mapo
Happy to answer your question:
After retiring from contracting I started independent building inspections and despite having my degree in building for over 30 years I found gap in knowledge in the area of Building Surveying (regulations etc) Then I completed Diploma of Building Surveying in 2005 but never with intention of becoming Building Surveyor. You can't be everywhere and do everything so I just do what I do best. This is why my student membership of AIBS was never renewed.
Happy to answer your question:
After retiring from contracting I started independent building inspections and despite having my degree in building for over 30 years I found gap in knowledge in the area of Building Surveying (regulations etc) Then I completed Diploma of Building Surveying in 2005 but never with intention of becoming Building Surveyor. You can't be everywhere and do everything so I just do what I do best. This is why my student membership of AIBS was never renewed.
Thanks for clarifying that. I only asked because I am in my mid 30s and been working in the civil engineering industry for 10 years. I am planning to get back to uni and move into building surveying so I was curious as to you not choosing to be registered. That’s makes sense. There is such a lot of information coming out and you really have to stay on top of it to remain current.
The other thing you have to keep in mind is that Building Surveying is risky business and most surveyors will be sued several times in their working life. That wasn't attractive to me nor the fact that many of them are not really well paid so NO thanks!
We were told by our last builder that one of us (or a family member/friend) had to be on site when the piers were poured. They didn't say why, just that it was compulsory to do so. When my husband turned up he was told to watch them pour and then he was given a sheet of paper to sign that it was so many cubic mtres. He then asked why he had to sign - 'sir, that's because you are agreeing to pay extra'. Would've been nice for the builder to tell us the reason why one of us had to be there. Apparently there was a provision in the contract but it wasn't alerted to us at any point prior.
It is not compulsory for you to be there, it's builders' responsibility to prove extra costs however as clumsy as it may have been at the very least he has made you aware of extra claims and given you the opportunity to see the excavation and concrete.
The first time many others find out when they get hit with huge bill and no chance of verification.
You did not know or understood what was happening.
That is why I recommend pre contract review where in addition you are introduced to procedures relating to provisional sums.
The first time many others find out when they get hit with huge bill and no chance of verification.
You did not know or understood what was happening.
That is why I recommend pre contract review where in addition you are introduced to procedures relating to provisional sums.
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