Hello
we have a general contractor contract with a fixed house price. Then there are additional house-related costs. These are listed individually. Now, for the item permits (building permit / planning permission), there is already an overrun of more than 50% of the budgeted house costs. Similarly, for the main construction work, which we are about to sign contractually, there is again an overrun of around 17%.
What is the legal situation in this case?
Thank you for your feedback.
stanger
we have a general contractor contract with a fixed house price. Then there are additional house-related costs. These are listed individually. Now, for the item permits (building permit / planning permission), there is already an overrun of more than 50% of the budgeted house costs. Similarly, for the main construction work, which we are about to sign contractually, there is again an overrun of around 17%.
What is the legal situation in this case?
Thank you for your feedback.
stanger
6
6Richtige1 Sep 2009 11:18Hello stanger,
what exactly does fixed house price mean? The contract you signed applies, so it would be best if you could share the relevant clause here, then we can give more detailed advice. If significant cost increases are already looming before construction starts, without you having redesigned or altered the house, it probably means the cheapest contractor was hired, who now wants to recover their profits this way. How did you select this contractor?
what exactly does fixed house price mean? The contract you signed applies, so it would be best if you could share the relevant clause here, then we can give more detailed advice. If significant cost increases are already looming before construction starts, without you having redesigned or altered the house, it probably means the cheapest contractor was hired, who now wants to recover their profits this way. How did you select this contractor?
We have a fixed-price contract for the building work. The usual additional costs are listed in brackets as estimates: 1. preparatory work, 2b) additional building costs (heating costs during the construction phase, construction electricity, installation of low-voltage cellar systems, etc.), then 4. surroundings and 5. incidental construction costs.
Among the incidental construction costs, the building permit / planning permission fees were more than 50% higher than budgeted. And for the first two items under the builder’s work in the surroundings section, the costs are now 17% higher than estimated. These are several thousand Swiss francs, which means we are already well above budget.
We are quite stuck now.
Thank you.
Among the incidental construction costs, the building permit / planning permission fees were more than 50% higher than budgeted. And for the first two items under the builder’s work in the surroundings section, the costs are now 17% higher than estimated. These are several thousand Swiss francs, which means we are already well above budget.
We are quite stuck now.
Thank you.
6
6Richtige1 Sep 2009 12:34Hello stanger,
The lump sum price is often referred to as a fixed price, but this frequently leads to misunderstandings. Without any other agreement, a lump sum price is a "fixed price" only in the sense that it does not change due to external factors such as inflation, wage increases, or material cost increases. However, it is certainly possible to include escalation clauses in a lump sum contract for such circumstances, which then makes the lump sum price a "variable price." It is incorrect to assume that a lump sum price is a fixed price in the sense that all changes or additional requests from the client are already covered by the lump sum. Such a "fixed price" does not exist. Therefore, the final total price can easily exceed the original lump sum price by 30%.
Since the price increases you describe result from estimated incidental costs (with an estimate, you can easily be off by 100%, as long as the total price for the house looks nice and low on paper 😉), there is not much you can do about that.
Since you live in Switzerland, you should ask this question again in the Swiss forum for safety.
If you still answer my question about your selection criteria for your general contractor, other builders might learn something and avoid costly mistakes.
The lump sum price is often referred to as a fixed price, but this frequently leads to misunderstandings. Without any other agreement, a lump sum price is a "fixed price" only in the sense that it does not change due to external factors such as inflation, wage increases, or material cost increases. However, it is certainly possible to include escalation clauses in a lump sum contract for such circumstances, which then makes the lump sum price a "variable price." It is incorrect to assume that a lump sum price is a fixed price in the sense that all changes or additional requests from the client are already covered by the lump sum. Such a "fixed price" does not exist. Therefore, the final total price can easily exceed the original lump sum price by 30%.
Since the price increases you describe result from estimated incidental costs (with an estimate, you can easily be off by 100%, as long as the total price for the house looks nice and low on paper 😉), there is not much you can do about that.
Since you live in Switzerland, you should ask this question again in the Swiss forum for safety.
If you still answer my question about your selection criteria for your general contractor, other builders might learn something and avoid costly mistakes.
Hello
thank you very much for your explanations. This is a severe disappointment for us, and we will certainly face bigger financial problems as a result. We still do not know what additional costs exceeding the budget will arise from the further work. 😡
Thank you and best regards
thank you very much for your explanations. This is a severe disappointment for us, and we will certainly face bigger financial problems as a result. We still do not know what additional costs exceeding the budget will arise from the further work. 😡
Thank you and best regards