Negotiating Home Building Contracts - Fixed Price but with Variation for Excavations/Footings - Easy to Be Overcharged?

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  Pungentia on 21/01/2015 - 10:27

  +1

  Hi fairyreadgirl

  We're just starting the build process with a volume builder here in Melbourne and that is the case with us.
  They gave us an estimate of site costs based on the kind of slab they thought we needed and then did soil testing/surveying.

  We then knocked down our house and they repeated the process, submitted their stuff to Council and Council have advised we are in a 1 in 100 year flood zone area, and as such, the finished floor level needs to be increased.

  Our site costs will now increase (apparently only about $1,000) as they will have to raise the height of the finished floor level (in our instance through extra fill I believe). Site costs were a risk we knew we had to take.

  From the research we have done I would suggest checking out the homeone forums and also definitely engage an independent inspector that you pay for to inspect at each stage of the build. In our instance we are planning to get 6 inspections - pre-slab, post slab, framing, lock up, fixing and at handover.

  Independent inspectors will hopefully pick up any little issues along the way, so that they can get resolved before they turn into big issues. I'm hoping they also keep everyone honest too along the way.

  Good luck with your build :)

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  thord on 21/01/2015 - 11:58

  +1

  It depends on how they're constructing your place. If they're working on the assumption that they'll dig down to a rock base to support the slabs with concrete piers or something, then yes, there's an unknown there.

  How far down is rock? Who knows? Have you had anyone do a survey? You could dig pilot holes, but the cost of doing that is probably more than the cost having to do extra work anyway.

  Essentially the builder is going to base his quote on the surrounding area, but if he has bad luck and doesn't find rock until say, 3m instead of 2m, is that his fault? Should he have to cover the cost? If he did have to cover that cost, his quote would increase on average to spread the risk. So, yeah, you're essentially playing a gamble on this part.

  TL:DR, yes it's normal, no it shouldn't break your budget if there's extra work.

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  theclearout on 21/01/2015 - 14:26

  +1

  Hi fairyreadgirl,
  It doesn't sound like you are at the fixed price stage just yet.
  Your builder will have made allowances for site costs based on their experience in your particular location and the general aspect of your site. These allowances would only be confirmed after a soil and site test (features and levels survey) is completed and an engineer has designed a suitable foundation for your dwelling, e.g., slab, stumps, if piers are required, etc.
  The surface soil may bear no resemblence to what is underneath and the soil test should go to a depth of at least 3m (from memory, others may be able to confirm). This is not to find rock - it is essentially to understand what lies beneath the surface that could affect the servicability of your foundation in the future. Finding rock could be a good or a bad thing. Sand and sandy loam could be a good or a bad thing. It may be silt which I understand is great if you have a slab foundation.

  Can you check with others who have used your builder to gauge the accuracy of their estimations in the past?
  Once the engineer has designed the foundation your builder can price it. Once that cost is known and you have agreed the final design for the house and fittings that the builder is to provide you would be in a position to move to the fixed price contract stage.

  I would highly recommend what Pungentia has suggested and invest in regular inspections, especially at pre-foundation stage (check that excavations and depths are in accordance with the engineers design and slab height is correct, if you're foundation is slab based). Also checking if fill (either new fill or result of 'cut-and-fill' is / should be compacted and the type of fill to be used.
  The foundation is probably the hardest to correct at a later date!! so it's worthwhile ensuring it is done right.
  Check at framing and lock-up also highly recommended and also if your house is brick veneer check the mortar. The mortar should be hard and resistant like the bricks. If it's not it may be worth having it checked by a specialist. This isn't cheap and hopefully you don't need to do it.
  Also, I know it's not part of your question but when you get to the fixed price contract stage you will be asked to sign the contract and probably initial or sign each page, even the drawings for the house.
  Please take note of EVERYTHING that is on every page, including the drawings as there may be requirements listed that you need to adhere to after construction is completed in order for the builder's warranty to be valid. This could relate to landscaping, maintenance of plants to same size that they were are time of foundation design, etc. Some of these requirements on you may be very difficult to meet and a small change of design now could help save headaches and constraints in the future, e.g., say you had a desire to plant particular trees close to your house, or put in a swimming pool in the future, etc.
  Also, don't feel pressured into signing the fixed price contract on the spot. Take it away and read it thoroughly. If there is anything you are unsure of ask for clarification, ask a friend, ask an expert…

  I hope this doesn't sound negative or alarming. This will probably be one of your biggest investments so it's worth taking the time to make sure you're happy with everything.

  You'll have great fun along the way and if you've done this before you'll know that you probably won't get it completed without some tears at one time or another.

  Best of luck with it !

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  fairyreadgirl on 21/01/2015 - 15:29

  Thanks everyone, all very helpful information!