Browse Forums Building A New House 1 Sep 13, 2022 9:34 pm My builder has provided me with two options for them to quote. Fixed price obviously has its benefits in the current market. The builder tells me they will try to lock in prices by paying for materials now and warehousing them either themselves of with their suppliers. They will of course factor in a hedge so for any costs they can't lock in, they are protected to a certain degree. This hedge will be added to the final quote. This seems like the safest bet to me. They have also provided an option where they will go open book and they will charge me cost + 15%. This has the benefit of no hedge and, supposedly, in the event any costs come down (hahaha) they will pass it on to me. This sounds good in theory, but I've got some concerns: * Can I trust the invoices the provide? It's not hard to doctor one or even ask their suppliers to mark one up * This probably means they will also care less about trying to find the best price. Using more expensive subbies makes them more margin. These options sound pretty common. Any advice or experience would be greatly appreciated. Thanksl Re: Fixed Price or Open Book? 2Sep 13, 2022 9:36 pm Mito My builder has provided me with two options for them to quote. Fixed price obviously has its benefits in the current market. The builder tells me they will try to lock in prices by paying for materials now and warehousing them either themselves of with their suppliers. They will of course factor in a hedge so for any costs they can't lock in, they are protected to a certain degree. This hedge will be added to the final quote. This seems like the safest bet to me. They have also provided an option where they will go open book and they will charge me cost + 15%. This has the benefit of no hedge and, supposedly, in the event any costs come down (hahaha) they will pass it on to me. This sounds good in theory, but I've got some concerns: * Can I trust the invoices the provide? It's not hard to doctor one or even ask their suppliers to mark one up * This probably means they will also care less about trying to find the best price. Using more expensive subbies makes them more margin. These options sound pretty common. Any advice or experience would be greatly appreciated. Thanksl I forgot to mention that I'm building in Sydney, NSW. Re: Fixed Price or Open Book? 5Sep 14, 2022 1:38 pm They'll only cut corners, hide costs, put ridiculous PSs in the contract, change the specifications and engineering, suck you in on green washed rendered images, etc,etc if your documentation is Cr@p and you are an easy target? Own your own design, engineering data/proofs then get 3 builder to quote. LOL, Can't be more open/transparent than that Cheers Chris Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Fixed Price or Open Book? 6Sep 14, 2022 10:36 pm With a cost plus option you wear 100% of the risk of any cost increases. It may also be difficult if you need finance as it's contrary to the conservatives nature of banks. Re: Fixed Price or Open Book? 7Sep 15, 2022 7:22 am StructuralBIMGuy They'll only cut corners, hide costs, put ridiculous PSs in the contract, change the specifications and engineering, suck you in on green washed rendered images, etc,etc if your documentation is Cr@p and you are an easy target? Own your own design, engineering data/proofs then get 3 builder to quote. LOL, Can't be more open/transparent than that Cheers Chris What do you have against renders? You raise this in almost every reply you post. Re: Fixed Price or Open Book? 8Sep 15, 2022 10:08 am Here are some definitions that might help.. 1. Green render washing (Architects/artists side) ...Architects are now focusing on carbon capture calculations on your rendered bim model? fat lot of good that's going to do you, when the builder changes the material by variation at contract signing. citing global shortage of green concrete..(humour) 2. Bim Washing (Builders Side).....There's conveniently a disconnect between the Architect Bim Model and Engineers 2D plans. Why? and Please, don't blame the engineers, as they're not asked nor paid to provide further info, other than the bare minimum Most clients will find that out after they have paid the builder a deposit for the PPA. Then they are told "The consultant/salesman/artist didn't get the construction engineering quite correct , now at cd stage extra costs need to be revised up on account of the lack of certified details.ie, no data/proofs,etc,etc nothing " Maybe they should question "why is the sales presentation rendered image so realistic, yet the estimate and CDs so far from built/engineering reality? Builders can't keep blaming Architects/salesman's in saying they made a mistake, they are not engineers. At Colour selection, lol, all the colour and realism is washed out from the fake rendered Bim elevations and that's when the Battlers realise that it was just a hook for a deposit...get it OT BIM software was designed for Architects to help them understand and document their design,etc Builders have turned it into the opposite. my2c please don't take it personal, I'm seeing examples of this all the time Cheers Chris Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Fixed Price or Open Book? 10Sep 16, 2022 9:25 am Q. What do you call a new home salesman with new potential customers wondering around a building site with fake renderings.... A. Lost and confused (humour) Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Fixed Price or Open Book? 11Sep 16, 2022 10:49 am Phil of Sydney It may also be difficult if you need finance as it's contrary to the conservatives nature of banks. This. were in a funny place at the moment as bank have relied on fixed as their means to complete their credit risk assessments which are always point in time. But given what has been happening in the industry, banks are also aware that fixed doesnt always mean fixed... Banks don't have technology for conducting floating assessments at scale and unless were talking about clients with extensive freehold assets or excellent equity, cost plus is likely to be declined by a standard lender - leaving you to approach second tier and custom lenders for an absolute silly premium. Dark matter scientist, can breathe underwater, mind reader and can freeze matter just by willing it. Trust me, its in my sig. Re: Fixed Price or Open Book? 12Sep 16, 2022 12:14 pm I guess Chris main point is that architects have to start adding structural engineering details into their 3D house designs, which certainly makes a lot of sense. Ideally, every good architect should be working with good structural engineer when designing a house. Considering that engineering is generally straightforward, most of the good architects understand quite well things like lintels, structural beams, common roof designs, however, almost everyone is struggling in understanding things like soil geology and foundations. Re: Fixed Price or Open Book? 13Sep 16, 2022 1:43 pm While we are discussing Architects/Artists Clients and architect rocks up on site to look at the newly installed 2 directional cantilever frameless doors The owner says to the bricklayer, hey I paid $100K for that,,,,, your brickwork is pretty sloppy? The bricklayer says to the owner, I get paid the same amount per brick above the lintel, what do you mean? The owner reply's , .... the architect gets 15% of that ( showing him the 3d rendering). The bricklayer says, FU, tell him to lay the bricks.. true story. Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Fixed Price or Open Book? 15Sep 17, 2022 7:50 am There are no free lunches, if you want the builder to underwrite cost increases you will pay a premium. Trust? You need a lobotomy to get that concept out of your head, its business and there is no room for trust, only verifying and checking, rectifying and re checking. Bank trusts you to pay your loan back? So why do they get you to sign a mortgage?Because they don't trust you. They have no feelings, its just pure business, building your home is business, act like a business person. People will kill people for money, so how do you think they won't diddle you? Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Fixed Price or Open Book? 16Sep 17, 2022 10:05 am Correct, no free lunches ,but there are free tastings, lol, add in an image, recipe, trusted information, leave a few ingredients out and keep 'em guessing .. that's how new homes now operates. OT I had a doctor (physiatrist) client who we build a house for many years ago, after many meetings, design iterations and quotes I ask him for a deposit for the PPA, but he was always hesitant, subconsciously there was a lack of trust, so I asked him why? His reply, If you want to understand the concept of selling/building products, connection to trust and the subconscious then you need to look deeper into Marketing, public relations, managing information, etc . Start with Dr E Bernays Social Engineer, he was Americas No1 salesman? people will believe you more if you made the top of the professions list? otherwise consult a psychoanalyst hmmm. Forget the medical degree we're in the building business. Now that's $300 for the site visit..will that be cash or applepay (humour) my2c Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Fixed Price or Open Book? 17Sep 24, 2022 2:26 pm "fixed price" building contracts are the biggest scam, I'm surprised lenders are still lending for it. Your typical building contract gives the builder too many levers they can use as leverage to get whatever they want from you. If I ever did another build, I'd search for a builder doing costplus, and preferably with an option for me to seek a different quote or suppler on specific items. Re: Fixed Price or Open Book? 18Sep 25, 2022 1:13 am You are wrong Boris. Fixed price contracts(notwithstanding exclusions) are sweet spot between price and certainty. Yes there are exclusions in fixed price contracts such as provisional sums that on adjustment can increase the price of the contract. You could view provisional sums as a cost plus contract within a fixed price building contracts. Not everyone can build on cost plus and there are many builders now either broke or going broke on fixed price contracts. As you can see fixed price contract is a sword that cuts both ways. If there were no provisional sums then I would as a builder have to assume the worst case scenario, say rock excavation, think of figure then double it then triple it, and you pay the premium for me taking a risk. If no rock is found then pure cream for me. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Fixed Price or Open Book? 19Sep 25, 2022 7:44 am Respectfully building-expert, you are wrong. The provisional sum part is the fantastic part of the fixed price contract because it's traced to actual supplier costs. It's the it where they say they can delay for as long as they like and reprice however they like upon delay (and the many forms of this lever) that they use to screw you. Re: Fixed Price or Open Book? 20Sep 25, 2022 8:19 am boris594 Respectfully building-expert, you are wrong. The provisional sum part is the fantastic part of the fixed price contract because it's traced to actual supplier costs. It's the it where they say they can delay for as long as they like and reprice however they like upon delay (and the many forms of this lever) that they use to screw you. Respectfully, you don't know how to read and Interperet a contract. Dark matter scientist, can breathe underwater, mind reader and can freeze matter just by willing it. Trust me, its in my sig. Thank you so much everyone. This all makes a lot of sense. I guess when you talk to a builder who butters up everything to look very polished, you get to start believing… 7 17199 So AFAIk the outcomes of the BAL ratings form part of a clause that allows them to pass these costs on to you. However the more relevant detail is how did it go from 19… 1 9108 Cupcake.girl This really depends on your local council. Each one has different definitions and ways to calculate contributions. This is called a contribution… 1 3576 |