Prime cost / Provisional items - deducting difference from contract

[laurieload]

Hello everyone,
I have been on the phone to Fair Trading/MBA etc but can't get a straight answer to a simple building query.

Our builder has spent considerably less for Provisional Sum Items than the contract allowance, and it says in Clause 21 of the HIA contract that if the actual price is less, the difference is deducted from the contract price.

Question: Does this happen at the end on the last payment? Can we demand the receipts? Neither FT or MBA will even tell me whether we are legally within our rights to demand receipts. I'm finding conflicting info on the web.

Also I notice if its more than the allowance, the difference can be added. How would we verify any additions are reasonable and true? FT don't seem to understand HIA contracts and we don't want to be slugged at the end just because the builder is annoyed for us requesting prime costs be deducated.

Has anyone had experience with either of these and how did you manage it?

Thank you so much in advance!

 

[smy7484]

The builder should have no right to go ahead with the provisional sum item unless it's approved by you.
Let's say the provisional sum item you are referring to is appliances or fixtures / fittings. Assumed $10,000 provisional sum allowed in the contract.
The builder should obtains appliances brand A and B with final cost and submit it for your approval. Say you have approved brand A with total cost of $7,000. You are entitield to the $3,000 + margin as variation. say 10% margin, your contract price should be minus $3,300.

** Contract usually specified all variation will be subject to +5% or +10% margin.

 

[smy7484]

The builder should have no right to go ahead with the provisional sum item unless it's approved by you.
Let's say the provisional sum item you are referring to is appliances or fixtures / fittings. Assumed $10,000 provisional sum allowed in the contract.
The builder should obtains appliances brand A and B with final cost and submit it for your approval. Say you have approved brand A with total cost of $7,000. You are entitield to the $3,000 + margin as variation. say 10% margin, your contract price should be minus $3,300.

** Contract usually specified all variation will be subject to +5% or +10% margin.

Again, all has to be as per your contract with the builder.
Cheers

 

[laurieload]

thanks Smy, he went ahead without consulting with us on quite a few things.

Do you know if we can within our rights to ask for receipts? Fair Trading gave no clear indication of this the 2 times I rang, although Masters Builders site seems to suggest so.

 

[Tigerboy]

I'm assuming that you have built in Victoria. I'm a registered a builder and part time lecturer in building law. The law is quite clear - the builder must provide evidence of provisional sum and prime cost items. If the builder has not spent the full amount allowed in the contract, then the balance will usually be deducted from the next applicable progress payment. In general this will be the final payment.

 

[laurieload]

Thank you Tigerboy, I really appreciate your advice.