All the details should be confirmed together with the final price.
The council approvals should have been obtained.
You need to make sure that all the changes you want are included both in the words of the specification and in the drawings. My advice would be to ask for the contract documents a few days before the meeting so you have plenty of time to check them.
You then have to wait until the builder is ready to start Construction which hopefully won’t be too long.
Of course the contract documents are the most important thing when organising the building of a new house.
However not many people realise that some parts of the contract document are more ‘important’ than others.
All three of these parts of the contract are normally bound together and presented for signing.
The order of importance are:
The Conditions of Contract. Usually either HIA or Master Builders Conditions.
The Specification. Which details in words what is included and the quality.
The Plans. Shows in diagram form what the house looks like and how the various structural elements are assembled.
As long as their are no inconsistencies the order of importance doesn’t matter. However if there is an an inconsistency then the more important document is the one that counts in law.
Say you had asked for windows to be double glazed. Although the plans may have been changed to show double glazing the builders standard specification which is based on single glazing may have been inserted in the documents by mistake. The builder then installs single glazed windows. Legally they could leave those windows in without reducing the price.
Although most builders would rectify such an error its well worth checking through all the documents thoroughly before you sign.
Don’t let the builder rush you…….take the documents home and spend a few hours looking through them!
Have you had problems with your contract documents ?
In your house building contract it will quote a Building Period. This starts when the contractor actually starts work (Site Clearance)
The period will be in days. (Calendar days not working days)
The time should allow for any expected loss of productivity due to:
None working days including
Rostered Days Off.
Christmas and Easter shut Downs.
Inclement weather including;
Waterlogged site following heavy rain.
An example would be my last Building Contract………… This had a time for completion of 260 days which included allowances of:
25 days due to inclement weather.
71 days for weekends Rostered days off etc.
The only time the builder has ground for extending the contract period is if: there has been unexpected delay that could not have been reasonably predicted. Such as:
Industrial Action – May be at a suppliers factory or be be something like a truck drivers strike.
More Inclement Weather – For instance a much wetter winter than average.
Delays Caused By You – Asking for Variations after contract signed, or not getting permits in agreed timescale, are examples.
If the builder want to claim an extension of time due to an unexpected delay he has to tell you of the delay as soon as he becomes aware of the delay.
Putting in a claim for an extension to avoid Liquidated Damages at the end of the contract is not acceptable.
All new house building contracts will have a section for Provisional Sums.
These are used for work that MAY be required, but the builder can’t provide an accurate estimate at the time of signing of the Contract.
The main area for provisional sums is related to foundations where the limited information obtained during the Site Investigation may not truly represent the conditions found over the whole foundation. For instance:
A rock item may be included even if the site is clay. This caters for any large boulders that may need to be removed.
An amount may be included for concrete piers if the amount of fill on site is hard to determine.
So the total contract price reflects the cost of building the house the builder will put in his best estimate of the cost of carrying out the work. The provisional sum will reflect the direct cost of the item to the builder only. (Overheads are included elsewhere in the contract price)
For example with a typical provisional sum item for removal of rock…… The builder will often include a figure of say $2,000 for excavation, and removal, of rock. If there is no rock the contract will be reduced by $2,000. Alternatively if the cost of excavator, labour and transport was $3,000 the final price will be increased by $1200. ($1,000 plus overhead percentage, typically 20%)
The builder is only allowed to add any overhead for profit and administration, to provisional sum expenditure items where they are above the original estimate.
Did you have any issues with Provisional Sums on your build?
Some new house building contracts will have Prime Cost items.
These are used for fixtures or fittings which will be required, but have not been selected prior to signing the Contract.
So the total contract price reflects the cost of building the house the builder will put in an estimated cost of supplying the particular fitting or fixture. This price will reflect the cost of the item only.
The builder is not allowed to add any profit, administration, or labour costs to prime cost up to the amount stated as these are considered to be included in the overall contract price. If the price is exceeded he is able to add his overheads (normally 20%) on the additional amount You are entitled to see a copy of the invoice as proof of the price paid by the builder.
You might want an expensive European oven that wasn’t currently available from the builders local supplier. The builder would put in the contract schedule a prime cost item of say $3,000 for the oven. Once the price of the oven, delivered to the builders store, become known the contract price can be adjusted.
In the example above if the final price of the oven to the builder, with normal builders discount*, is $2,500 the contract will be reduced by $500. Alternatively if the price was $3,300 the final price will be increased by $360.
*If the builder got an additional cash discount he keeps the benefit of that as he has to cover the cost until he gets paid at the next progress payment!
You need to check that the prime cost amounts in any quotation are reasonable. (For instance if you are planning for expensive tiles make sure the prime cost amount for tiles is enough for the tiles you like)
In order for a builder to win work builders may underestimate the cost of prime cost items. They know the contract allows them to increase the cost to you if they ‘have made a mistake’ in their estimate.
The more Prime cost items in a contract, the greater the chance of cost overruns!
See the following link for another cost item you need to be aware of: Provisional Sums.