Post Contract Variation raised by Builder

Superfly1130 · Oct 10, 2019 3:44 pm

Hi,

I'm reposting this here as I think it should be in this thread instead of General Discussion.Just want to ask your experience and expertise how to handle this matter. We signed our building contract early this year using NSW Fair Trading contract template.Our contract under Clause 10(Provisonal Sums) has 0 amount so we were not expecting any sudden extra cost. However all of a sudden, the builder has raised a variation related to additional piering and and steel reinforcement due to poor soil quality. The next day, we went to the site to check and we were surprised that the slab pouring is already in progress. Hence there was no way for us to verify if the work was actually done and if variation cost is justifiable($9,000 plus). We raised this with them and no response yet why they didn't give us a chance to verify so at least we can consent the variation. Another variation they raised is BAL 12.5 rating related works and materials as according to them it's unforseen. We signed with them as home and land package and BAL rating is already known beforehand but they did not indicate any such additional cost in the provisonal sums and not anywhere in the tender. Hence we assumed its already included in the fixed priced contract. We are contesting this with them as variation based on our understanding, are costs that are unforseen. We are not happy with it and we refuse to pay the variation they raised. Can anyone advise how should we handle this problem? The total amount of the variation is $20,000 plus and there is no way we can get finance for this on top of our existing loan. Thank you in advance.

Blacktea2sugars · Oct 10, 2019 8:29 pm

Superfly1130

Hi,

I'm reposting this here as I think it should be in this thread instead of General Discussion.Just want to ask your experience and expertise how to handle this matter. We signed our building contract early this year using NSW Fair Trading contract template.Our contract under Clause 10(Provisonal Sums) has 0 amount so we were not expecting any sudden extra cost. However all of a sudden, the builder has raised a variation related to additional piering and and steel reinforcement due to poor soil quality. The next day, we went to the site to check and we were surprised that the slab pouring is already in progress. Hence there was no way for us to verify if the work was actually done and if variation cost is justifiable($9,000 plus). We raised this with them and no response yet why they didn't give us a chance to verify so at least we can consent the variation. Another variation they raised is BAL 12.5 rating related works and materials as according to them it's unforseen. We signed with them as home and land package and BAL rating is already known beforehand but they did not indicate any such additional cost in the provisonal sums and not anywhere in the tender. Hence we assumed its already included in the fixed priced contract. We are contesting this with them as variation based on our understanding, are costs that are unforseen. We are not happy with it and we refuse to pay the variation they raised. Can anyone advise how should we handle this problem? The total amount of the variation is $20,000 plus and there is no way we can get finance for this on top of our existing loan. Thank you in advance.

Ok,

Here is where I got to.

With regard to the BAL,

home.vic.gob.au under Building and planning -

The BAL is not a pre determined system, but rather the onus appears to be on the property owner, or the developer to gauge the Bushfire Attack Level (BAL) according to a set of guidelines.
More importantly,
"By following the six steps in the guide accurately you should be able to determine your building site’s BAL. However, you will still need to satisfy the relevant building surveyor that the BAL is correct. This guide is an indication of your site’s BAL only. Importantly, if the BAL is accurate then the appropriate construction methods will need to be incorporated in the design documents and specifications that you submit to your relevant building surveyor for a building permit"

So - they may have based their costs on a very low level, however 12.5 is still quite low.
Based on the charts on that page, they start at 12.5 and go all the way up to FZ (Flame Zone)

Personally, I'd be querying what BAL rating they used prior to the variation. Potentially, the surveyor, or even council, may stipulate that the 12.5BAL is a minimum in your build area. If so, then that should have been allowed for PRIOR to the fixed price contract signing.

https://www.hume.vic.gov.au/files/sharedassets/hume_website/building_and_planning/building_renovations/a_guide_to_assessing_your_propertys_bushfire_attack_level.pdf

Second point.

Poor soil quality resulting in variation to piers.
The soil quality would not have changed. Any variation to piers would have been an oversight from their engineering department, which they may have just realised. This is a cost that should be met by the builder. As you stated, they did not request consent prior to slab pour, nor were you able to see any evidence of the pier variation. How do you know it's been varied? Photos taken? Reporting done? Who is signing off on the slab, other than their engineers? Might be worthwhile engaging in an independant inspection.

Hopefully this is it by way of hiccups. Smooth sailing on calm waters from now on!

cheers

Superfly1130 · Oct 11, 2019 8:29 am

Thank you so much for your informative response. But since the BAL works and related materials are not at all declared in our contract and tender(though it is known to all parties that site is BAL 12.5 prior to contract signing), is it mandatory for the builder to satisfy the BAL requirements? Our fear is, if they can just simply say they won't do the BAL requirements because we dont want to pay this variation then we suffer later on not getting the Occupational Certificate.

Blacktea2sugars · Oct 11, 2019 11:32 am

Superfly1130

Thank you so much for your informative response. But since the BAL works and related materials are not at all declared in our contract and tender(though it is known to all parties that site is BAL 12.5 prior to contract signing), is it mandatory for the builder to satisfy the BAL requirements? Our fear is, if they can just simply say they won't do the BAL requirements because we dont want to pay this variation then we suffer later on not getting the Occupational Certificate.

OK

So you knew it was BAL 12.5, and they knew it was BAL 12.5 prior to Tender and contract signing. All costs worked out for 12.5?
So what is the variation exactly?

Superfly1130 · Oct 11, 2019 1:30 pm

Yes everyone's aware of the BAL rating but the cost of works and related materials to comply with the 12.5 rating, the builder has raised only as a variation post contract signing saying it's unforseen. We are contesting it as it's not an unforseen fact and we're not agreeing with the addtional cost that they are charging us with. So if this is the case, can they just say they will build our house but is non compliant to the BAL?

Blacktea2sugars · Oct 11, 2019 2:42 pm

Superfly1130

Yes everyone's aware of the BAL rating but the cost of works and related materials to comply with the 12.5 rating, the builder has raised only as a variation post contract signing saying it's unforseen. We are contesting it as it's not an unforseen fact and we're not agreeing with the addtional cost that they are charging us with. So if this is the case, can they just say they will build our house but is non compliant to the BAL?

Hey again Superfly

Not exactly sure how they can say it's unforeseen, when 12.5 was clearly noted prior by all parties.
I'd be insisting the extra costs are paid for from the builder's margin.

I'll watch this one with interest... :roll:

Superfly1130 · Oct 11, 2019 4:56 pm

Blacktea2sugars

Superfly1130

Yes everyone's aware of the BAL rating but the cost of works and related materials to comply with the 12.5 rating, the builder has raised only as a variation post contract signing saying it's unforseen. We are contesting it as it's not an unforseen fact and we're not agreeing with the addtional cost that they are charging us with. So if this is the case, can they just say they will build our house but is non compliant to the BAL?

Hey again Superfly

Not exactly sure how they can say it's unforeseen, when 12.5 was clearly noted prior by all parties.
I'd be insisting the extra costs are paid for from the builder's margin.

I'll watch this one with interest... :roll:

Yeah that's where we stand as well. These kinds of schemes are really a burden for first home owners. We'll update this trail once i got one. Thanks again for your insights