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Carsten8223 Jan 2014 17:55Hello dear forum members,
I would like to get your opinion regarding the increase in house construction costs in 2013. Our general contractor is pushing for an adjustment of the fixed price due to various delays and rising costs of materials and labor. Contractually, this is acceptable and not contestable. He is asking for 2.5 % and argues that this is actually generous, considering they had cost increases of over 7 % in 2013. However, when looking at the construction cost index and the collective wage agreements of the construction industry, this seems quite excessive to me. How do you see this, or what have your experiences been?
Thanks in advance.
Best regards, Carsten82
I would like to get your opinion regarding the increase in house construction costs in 2013. Our general contractor is pushing for an adjustment of the fixed price due to various delays and rising costs of materials and labor. Contractually, this is acceptable and not contestable. He is asking for 2.5 % and argues that this is actually generous, considering they had cost increases of over 7 % in 2013. However, when looking at the construction cost index and the collective wage agreements of the construction industry, this seems quite excessive to me. How do you see this, or what have your experiences been?
Thanks in advance.
Best regards, Carsten82
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HilfeHilfe23 Jan 2014 22:03Hello,
you should not only consider the wages, which have also increased (a 2% wage increase usually means about double for the employer due to social security contributions).
Material costs have also become more expensive. The factories are operating at full capacity, the smelters are running at full speed.
you should not only consider the wages, which have also increased (a 2% wage increase usually means about double for the employer due to social security contributions).
Material costs have also become more expensive. The factories are operating at full capacity, the smelters are running at full speed.
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Carsten8224 Jan 2014 14:00Thank you for your feedback. There is no special right of termination directly due to price adjustments; however, we can withdraw at any time before the start of construction by paying a 5% down payment of the construction sum. With a 7% increase, this decision would be quite easy to make :-)
By "contractually acceptable," I mean that the relevant clause regarding price adjustments is included in the contract, but not explicitly quantified. As described, they supposedly base this on cost increases for materials and wages.
The figure of over 7% seems more like an argument to suggest that we are ultimately relieved to end up with "only" 2.5%. The Federal Statistical Office reports price increases for new buildings of only 2%. So there is a significant difference of about 5%.
@HilfeHilfe: Collective bargaining agreements do not actually have a disproportionate effect on gross employer costs. For the year 2013, it was around 3.2%.
By "contractually acceptable," I mean that the relevant clause regarding price adjustments is included in the contract, but not explicitly quantified. As described, they supposedly base this on cost increases for materials and wages.
The figure of over 7% seems more like an argument to suggest that we are ultimately relieved to end up with "only" 2.5%. The Federal Statistical Office reports price increases for new buildings of only 2%. So there is a significant difference of about 5%.
@HilfeHilfe: Collective bargaining agreements do not actually have a disproportionate effect on gross employer costs. For the year 2013, it was around 3.2%.
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HilfeHilfe25 Jan 2014 08:54Hello,
what use is it to you if he demanded 7% and you paid a 5% discount and come out ahead?
Then the stress begins, as you look for a new supplier who also struggles with the general price increases. Supply and demand. Companies are busy.
Regarding the rates, in addition to wages, material prices are also rising. And in my opinion, these have a greater impact on the price increase!
what use is it to you if he demanded 7% and you paid a 5% discount and come out ahead?
Then the stress begins, as you look for a new supplier who also struggles with the general price increases. Supply and demand. Companies are busy.
Regarding the rates, in addition to wages, material prices are also rising. And in my opinion, these have a greater impact on the price increase!