How to make a Fixed Price Construction Contract???

[vincenzo]

Don't pm too much guys This thread is really good, lots of great info, i appreciate you guys sharing
And congrats on having 6 ip's soon Chomp!

 

[MichaelW]

Don't pm too much guys This thread is really good, lots of great info, i appreciate you guys sharing
And congrats on having 6 ip's soon Chomp!

Agree. Chomp, post it up here if you're comfortable. I think it was a good suggestion.

Cheers,
Michael

 

[Chomp]

Ok all Im saying to Michael is for a project that size, if all the prices you get are high without a Bill of Quantities you wont be any wiser (to an extent).

If you dont have a builder you know or trust get a Bill done and then compare apples with apples. The other way to do it is go for a cost plus contract but then again if you
dont have the quantities your flying blind.

Sub contractors constantly try it on and if the builder falls for it or isnt too concerned then so do you.

Chomp

Havent got six yet Vince but plenty of time

 

[sports fan]

That's some of the worst advice i've heard. An architect will charge anywhere from 5-15% of the contract value for work that is often provide free of charge by a lot of builders or at a cost that is refunded if you sign a building contract with them.

If you're worried about provisional sums or prime costs in a building contract then add a 'selections allowance' of say $10,000 to the contract before you get finance. Any portion of the $10k that isn't spent will be refunded on completion of the project.

Also, saying the HIA or MBA building contracts is in favour of the builder is also a false comment. HIA contracts are actually pretty much 50/50 when it comes to fairness for either party and the MBA contracts lean more towards the consumer than the builder. The simple truth is many people don't formally challenge a builder when things go wrong or believe builders comments when they challenge the contract rather than seeking independant advice.

can you explain to me how using an architect is bad advice? i never said it was the cheapest way to build but if your into builder design& construct homes then i guess that must just be your taste

are you serious about hia contracts not being skewed to the builder interests

 

[boods99]

Ok all Im saying to Michael is for a project that size, if all the prices you get are high without a Bill of Quantities you wont be any wiser (to an extent).

If you dont have a builder you know or trust get a Bill done and then compare apples with apples. The other way to do it is go for a cost plus contract but then again if you
dont have the quantities your flying blind.

Sub contractors constantly try it on and if the builder falls for it or isnt too concerned then so do you.

Chomp

Havent got six yet Vince but plenty of time

I agree, a project of this size calls for a BOQ.
In regards to a cost plus contract, you will find that most lenders will run a mile from this sort of set up as the construction price cannot be quantified. They don't like things left open ended, especially when they are the ones footing the bill. They will almost certainly require a GMP or fixed price contract.

Boods.

 

[ryan_mel]

QS first

Ryan,
Based on my experience, big differences in prices is common between trades, but I dont compare builders so for you it is more involved. I do an estimate of the trade put a price to the estimate and then I have my figure. Any one who is close to that is being realistic anyone else (unless they have made an error is trying it on). They do this with me on a regular basis, I have never fallen for it but they persist anyway, why I couldnt tell you.

If you have all the specifications and a finishing schedule for your project. And you cant do it yourself, consider going to a QS or getting a couple more prices from different builders.

Profit varies I think on a job that size they would be hoping for 20%, but it all depends on how much they want the work.

Chomp

Thanks Chomp,

So if I don't understand wrongly, what you mean is to get a QS first, then I'll have all the specifications, then I ring all the trademen to get each item cost, plus some foundamental stuffs such as slab, plumbing, eletricity etc to estimate the cost of the construction .... Is it?

Cheers

Ryan

 

[ryan_mel]

I did the Diploma of Builders Registration and Diploma of Building in WA. There should be something similar in your state.

You should be able to do the estimating subjects without having to do anything else, but I might be wrong.

Chomp

Thanks for this, I'll find it out.

 

[ryan_mel]

Im not sure where you are coming from with this one, your contract will bind you to the work involved, anything outside of this is up for negotiation as to who will perform it and at what price.

If you sign a lump sum contract your builder has the obligation to build what is asked for. He wouldnt charge you any more if he made a mistake and ordered too many bricks and he wouldnt give you a discount if he managed to get trades cheaper than his original price.

Chomp

I think what I mean is those optional items, which means we might not do it at the end, or even we do it, maybe some variable materials/methods would be applied when it's happening. For such a case, it's still possible for the builder to issue a variance during the construction. correct me again if I am wrong.

Cheers

Ryan

 

[Minx]

Thanks Chomp,

So if I don't understand wrongly, what you mean is to get a QS first, then I'll have all the specifications, then I ring all the trademen to get each item cost, plus some foundamental stuffs such as slab, plumbing, eletricity etc to estimate the cost of the construction .... Is it?

Cheers

Ryan

Ryan the above sound more like owner building. In Vic you can't owner build more than one property so to do a 4 townhouse development you would have to engage a builder.

What is the point of getting quotes for everything if going through a builder? Generally builders make 20% profit. What tradies charge varies. E.g my other half charges on an hourly rate $50 plus gst. Project builders pay prob half of that.

Also in terms of getting other trades to do things outside of contract, this would occur after handover. E.g we would never allow a floor installer who we don't hire onto the site during the build for many reasons. 1. Workcover (oh&s) 2. Insurance and 3. Can delay build time. Using the example of flooring, if plaster is installed I can bet that there will be a few bungs on the wall due to getting the floorboards nice and tight. If another contractor not engaged by us does any damage, we will not wear it. Also, any work not performed by us will not will not be covered by us.
What that then means is that if you sell or rent the dwelling out, you can't call the builder back for those items and rectifying can get messy (and I have seen it happen).

In regards to the demolishment hard to say if you are really being over charged. Yes I can get a dwelling demolished for 10k however, if there is asbestos that figure climbs to 14k. Maybe the builder has identified asbestos and as such is quoting that rate. Maybe when calling demolishers they have quoted the standard rate (no asbestos). You really need to compare apples with apples.

Best of luck!