Browse Forums General Discussion 1 Jun 01, 2008 9:46 am Hi, Has anyone had their builder give them a 'variation' part way through construction for the cost of materials going up? The house was started before the strat and price review date, and then eight weeks later the builder tells us the price of concrete and timber has gone up, so we have to pay another 5k. Is this a common practice? What have others done?
Thanks, Garn Re: How often does this happen? 2Jun 01, 2008 10:35 am What type of building contract you have?
You should only get this if you have a cost plus contract; no room for this sort of variation on a fixed price contract (which BTW is what most major builders use). Re: How often does this happen? 3Jun 01, 2008 12:58 pm Duminda is spot on.....because of the number of homes volume builders build they can take the risk on a fixed price contract....they can adjust their margins on the next house if they think they are losing money on the current lot being constructed as a result of material cost changes.
As Duminda says cost escalation is allowed for in cost + contracts, or on major projects which go over several years. Escalation clauses are then invoked which take into account CPI and by a complex formula calculate the new cost. I wonder....if prices go down are they going to give you a refund.....which is what escalation clauses also allow to happen in the case of recession....I think not little puppy.... mmm....donuts Homer Simpson 1956- Links: Site Costs Ready Reckoner | H1 Addiction Medical Advice | Château TDL: The Backyard 9 24816 In Victoria you cannot put a caveat on arising from a domestic building contract. 65 112443 I've just built 3 stairs off a landing out the back and been told by the private certifier I need hand rails sorry tried to attach a pic but couldn't mine don't have sides… 5 5720 |