ᐅ General contractor requests price increase for the entire house
Created on: 6 Oct 2022 15:33
M
MSHausbau
Hello everyone,
I’ve read a lot and hope to get some advice...
We are building a house and are about 90% finished. The fixed price agreement expires at the end of October, and the contract doesn’t specify what happens afterward.
Now our general contractor is asking for €50,000.
His reasoning: As of today, the house is 18.66% more expensive, which is €51,250, so he is demanding €50,000 from us.
He already indicated over the phone that it probably won’t be the full 50K, but the 10K we offered was too low.
Now the question is, are we completely mistaken? I don’t see why we should pay extra for the entire house, only for the items that are still outstanding. That would be about €8,000 if you really apply the 18%.
Do you understand what I mean?
Does anyone have legal experience or some tips on how to argue this?
Our lawyer advises settling in the range of €15,000 to €20,000.
I’ve read a lot and hope to get some advice...
We are building a house and are about 90% finished. The fixed price agreement expires at the end of October, and the contract doesn’t specify what happens afterward.
Now our general contractor is asking for €50,000.
His reasoning: As of today, the house is 18.66% more expensive, which is €51,250, so he is demanding €50,000 from us.
He already indicated over the phone that it probably won’t be the full 50K, but the 10K we offered was too low.
Now the question is, are we completely mistaken? I don’t see why we should pay extra for the entire house, only for the items that are still outstanding. That would be about €8,000 if you really apply the 18%.
Do you understand what I mean?
Does anyone have legal experience or some tips on how to argue this?
Our lawyer advises settling in the range of €15,000 to €20,000.
X
xMisterDx6 Oct 2022 22:01Since we’ve been through quite a long ordeal here... We signed the contract at the end of 2019, hoping for a quick development of the building area.
At the end of 2020, the first price adjustment came, just under 4%, which was still reasonable.
At the end of 2021, the fixed price period expired, even though nothing had happened in the building area or on our little patch of mud. That resulted in a sharp 15% increase. We were told it was actually supposed to be 20%, but since they really wanted us as customers, blah blah... well, we let it go.
In 2022, the price was only raised by just under 5%. I always check online what the house costs with the basic finish level in my region...
2021 was really the worst year to start building... or, in our case, not to start on time...
And now a reminder that neither the general contractor, nor the tradespeople, nor anyone else does all this out of goodwill, but to make money from it. If there’s no longer any profit to be made or if they even have to pay out of pocket, they simply won’t do it and can just stay in bed in the morning...
Some of you are probably also dependent on customers accepting price increases because otherwise, there’s no point in continuing at all. Always keep that in mind.
At the end of 2020, the first price adjustment came, just under 4%, which was still reasonable.
At the end of 2021, the fixed price period expired, even though nothing had happened in the building area or on our little patch of mud. That resulted in a sharp 15% increase. We were told it was actually supposed to be 20%, but since they really wanted us as customers, blah blah... well, we let it go.
In 2022, the price was only raised by just under 5%. I always check online what the house costs with the basic finish level in my region...
2021 was really the worst year to start building... or, in our case, not to start on time...
And now a reminder that neither the general contractor, nor the tradespeople, nor anyone else does all this out of goodwill, but to make money from it. If there’s no longer any profit to be made or if they even have to pay out of pocket, they simply won’t do it and can just stay in bed in the morning...
Some of you are probably also dependent on customers accepting price increases because otherwise, there’s no point in continuing at all. Always keep that in mind.
This is not entirely on-topic but still relevant: today we received an email regarding a price increase (from us to a customer) and how to handle it:
"Dear Sir or Madam,
On xx.xx.2022 you informed us in writing that as of 01.01.2023 the XXXX costs would increase by 4%.
The resulting additional expenses for us cannot be covered by the fixed budget allocated by our funding agencies. Therefore, we cannot accept the price increase at this time and kindly ask you to review it again.
We understand that your company must also respond to the current economic situation due to the global pandemic and the war in Ukraine, and consequently adjust prices. However, in the interest of continued good cooperation, we would like to ask you to reconsider the planned price increase.
We would be happy to reach an agreement with you and are available for a personal meeting by appointment at any time.
Thank you in advance for reviewing our proposal.
Kind regards"
Note: With this customer, there was no contractual price increase agreed upon (usually about 1.5% annually with other customers). Most customers generally have "standard EVB IT contracts" with us.
"Dear Sir or Madam,
On xx.xx.2022 you informed us in writing that as of 01.01.2023 the XXXX costs would increase by 4%.
The resulting additional expenses for us cannot be covered by the fixed budget allocated by our funding agencies. Therefore, we cannot accept the price increase at this time and kindly ask you to review it again.
We understand that your company must also respond to the current economic situation due to the global pandemic and the war in Ukraine, and consequently adjust prices. However, in the interest of continued good cooperation, we would like to ask you to reconsider the planned price increase.
We would be happy to reach an agreement with you and are available for a personal meeting by appointment at any time.
Thank you in advance for reviewing our proposal.
Kind regards"
Note: With this customer, there was no contractual price increase agreed upon (usually about 1.5% annually with other customers). Most customers generally have "standard EVB IT contracts" with us.
G
Gerddieter6 Oct 2022 23:00One more suggestion for your conversation tomorrow:
If the general contractor requests an increase, it would usually be standard for them to provide you with their actual cost breakdown and justify the increase based on that.
Otherwise, the discussion becomes very one-sided if they say $50,000, you say no, $10,000, they say no, $50,000 but maybe $30,000… and so on.
The price increase must be justified with real reasons—what exactly became more expensive for the general contractor regarding YOUR house? I would be okay with paying extra if I see that the general contractor didn’t incur additional costs that they can absorb themselves—I’m not asking for a gift after all…
If the general contractor requests an increase, it would usually be standard for them to provide you with their actual cost breakdown and justify the increase based on that.
Otherwise, the discussion becomes very one-sided if they say $50,000, you say no, $10,000, they say no, $50,000 but maybe $30,000… and so on.
The price increase must be justified with real reasons—what exactly became more expensive for the general contractor regarding YOUR house? I would be okay with paying extra if I see that the general contractor didn’t incur additional costs that they can absorb themselves—I’m not asking for a gift after all…
kati1337 schrieb:
This is what I meant in my earlier post. Just with less fancy wording.Which of your posts are you referring to?https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
11ant schrieb:
See my explanation in post #49: a installment of the payment schedule is not necessarily the same as a phase of work completion that can be partially accepted or otherwise clearly defined and valued. In fact, it is. The payment schedule is directly linked to the completion of specific tasks like the roof, shell construction, etc. The general contractor incurs most of the costs at the time of performance, not only at a later acceptance stage. Otherwise, the agreed fixed price would not make any sense and could, in my opinion, be seen as unfair or a breach of good faith. That is just my layperson’s view.
Whether disputing this makes sense is another matter.
H
HilfeHilfe7 Oct 2022 06:31I find it difficult to pay a price adjustment for installed trades retroactively. I wouldn’t sign anything and would let him come. How much money have you kept aside?
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