Fixed price contracts - Are they really?

Garn · Nov 12, 2008 8:13 pm

Hi, If you are already having disagreements about the interpretation of clauses and meanings, you really need to ask yourself what the building process would be like with this builder.
Also, check the definition of a variation. Some builders like to say that an increase in the cost of materials is a variation. Many others (ie those who aren't builders) will interpret the meaning of a 'variation' to be 'a change to the work to be performed' ie a change to the scope or specifications of the work. This is infact the definition in the contracts and the legislation covering building contracts.
Went through this sort of hassle with my build and got legal advice. Builder backed off and accepted that he had no grounds to increase the price but it made for a very tense and uncomfortable 6 months.

Garn

Cleishy · Nov 12, 2008 9:28 pm

There are fixed price contracts out there. Fixed site costs, with all inclusions. You just need to find them.

stu · Nov 28, 2008 1:53 pm

My builder kept hitting me with variations without prices as soon as he found out that we were desperate to move in asap. He managed to sift through our tender contract and find all sorts of things that werent clearly itemised and then include them as variations. We ended up paying for items that we were verbally assured were included in the fixed price.
Still trying to find out if Queensland law has something that protects us against this.
We have lost $8000-00 through this variation scam, and this is through a reputable home builder. Everytime we questioned the variation they threatened to walk off the building site.
They got very excited when we told them that we were about to become homeless if the house wasnt built in time. (They were the ones that cause this by giving us the wrong completion date 3 times, and us using this info to give notice on our rental property) These guys can really manipulate you if your not experienced in house building.
We still think that they knew exactly what they were doing and got that $8000 through trickery.

cara101 · Mar 04, 2011 10:45 am

HI,
We just received a notice from the builders stating 'We have been advised by the engineers that an amendment is required to your plans... blah blah blah. Unfortunately, this has only just come to light as it was not noted on the original engineering and therefore needs to be charged for'
Can they do this.... We are up to the 8th drawing of these plans surely if it was an oversight on their behalf they should have to pay for it. We are in a fixed price contract + prov sums and Prime costs.
If anyone can give me a little insight to this I would be greatly appreciative
Thanks
Cara

zozo · Mar 04, 2011 11:44 am

That happened to us Cara. Our first set of plans were drafted in September and it wasn't until very late December when plans were nearly ready for council that a draftsman realised that the alfresco was too close to the sewer line. No new information was given to them, was just an oversight on their behalf. We were thrown with potentially costly variations and engineering inspections so we just told them to remove the alfresco completely and we would not pay for their costs to redraft the plans. while we are very disappointed to not have an alfresco, I felt our approval of the first variation would've been an invitation to continue to send us cost increase variations to our fixed price contract, after receiving two in two weeks. unfortunately most builders won't admit fault and just add it to your costs.

Casa2 · Mar 04, 2011 6:26 pm

Wonder if it works the other way. If the builder notices a error that reduces the cost, do they say "Hey, good news, we found an error and the price has just gone down".