Fixed Price Contracts
Having a ‘Fixed Price Contract’ doesn’t mean the bottom line price of the contract will stay the same.
All it means is that the majority of prices for individual work items are fixed.
Here are reasons for changes in the final price:
- Planning and Building Approvals Some blocks will have requirements placed on them that may only be determined after the plans are submitted; for example Bush Fire Prevention.
- Site Works Sometimes the excavation of the foundations can reveal worse ground conditions than the three small test holes indicate. Normally the price is only fixed if the site investigations results are representative of the whole foundation.
- Increases in Taxes or Charges Not a lot that you can do if the Government or Council changes the tax rules or scale of fees.
- Variations on Building Works The contract prices are only fixed for the agreed drawings and specification, start changing things and prices can rise quickly!
- Prime Cost Items and Provisional Sums Adjustment See the following links Prime Costs and Provisional Sums.
Also see Final Cost