Let me start this blog with a more positive note.  There are lots of builders  that will always do the right thing by their customers.  However there is also a lot of them that purposely use any tools available to them to do the wrong thing and one of these most popular tools is their terms and conditions.

This is in an attempt to trick and provide you with a non-fixed price tender.

In this blog, we will look at some terms and conditions that most people do not pay attention to, which can prove to be a very expensive mistake.

Now this is not an exhaustive list by any means, but it’s to get you to critically think about some of these T&C’s and avoid paying the ultimate price.

Let’s look at some of the traps that you need to be aware of…

Trap 1:  Piering

Sample Wording

  • Piering over the length as nominated in the tender, which will be charged at $100/m for extra meterage confirmed from the piering contractor site documentation.  Note that no additional charge will be made for the drilling rig.

Potential Issues

  • This basically says:  “We guessed (nominated) the required piering and we will be charging you more later at the rate of $100/m.”

Potential Solution

  • Every builder should obtain a soil test (sample page below) upfront, NOT later
  • If your builder has done their investigations properly, they should be fixing the piering for your build.  Even if they get it wrong, they should not be passing on the cost of their mistake back to you.
  • Have the builder stipulate clearly that Piering is FIXED and have them remove any note re extra charges from their terms & conditions.

Trap 2:  Services

Sample Wording

  • Service runs (being sewer, stormwater, electric, water, gas & telephony) over the length as nominated in the tender as a result of service connection points not being within the property and located as tender assumptions.

Potential Issues

  • This is saying: “I guessed the length of connecting your services to your property (nominated), so I will be charging you extra at a later time.”

Potential Solution

  • Have your builder conduct their investigation early and make sure that there is no guess work.
  • Have your builder clearly stipulate in their tender that they included service connections and have them remove any commentary around any ambiguity.

Trap 3:  Site Conditions

Sample Wording

  • Site and Sub-surface conditions that may be brought about by the physical conditions on, under or adjacent to the site as a result of waste, debris, contamination of the site; asbestos, water charged sites, affect or diversion of natural and overland flow paths, difficult or limited access site requirements or toxic waste which may require the Builder to carry out additional work will be charged at an extra cost.

Potential Issues

  • This particular builder is simply saying that I will be charging you for a lot of things that will be happening on site while I am building.  I don’t want to tell you about them now because I either
    • do not know them at this stage OR
    • do not care to find out upfront about them OR
    • want to keep my upfront tender price low so charge you more later

Potential Solution

  • Have your builder conduct their investigation early and make sure that there is no guess work.
  • Make sure your builder remove anything remotely similar to this note and have everything in writing.  Do NOT take their word for it – if it is not in writing, it did not happen.

Trap 4:  BASIX

Sample Wording

  • The impact of the thermal efficiency BASIX requirements requirements will not be known until further investigations and reports are completed at a later stage.  We have included a provisional allowance in your tender in respect of complying with the thermal efficiency BASIX requirements.  We will advise if the actual costs will be more or less and your final tender price will be adjusted accordingly.  

Potential Issues

  • So if I am paying for a fixed price tender, this specific T&C states that my tender price will be adjusted because you do not know what to allow for my BASIX requirements.
  • By the way, this is the biggest load of crappp… If I am paying you builder’s margin, I expect that you do your job and take on some of the risks.  If I am taking on ALL the risks, then why in the world am I paying you builder’s margin?

Potential Solution

  • If I am paying a fixed price, then you as the builder need to fix it.
  • If you made a mistake, then as the professional builder, you need to absorb that expense.  You don’t get to pass it on the owner.
  • Have your builder put it in writing that they included BASIX as a fixed price, upfront before you sign anything with them.

Trap 5:  Ducted Air Conditioning

Sample Wording

  • We have included a standard air conditioning unit to your home.  If this unit is not suitable to your home design, you will have the opportunity to upgrade your air conditioning system during your colour consultation.  

Potential Issues

  • The builder has not taken into account my home requirements re the air conditioning unit
  • The builder may purposely include a smaller unit so they can have me upgrade later
  • Whatever the reason is, it’s a trap set specially for you (the client)

Potential Solution

  • Contact the manufacturer direct and ask them re the adequate air conditioning unit size for your home
  • Get a couple of quotes from a couple of installers just to make sure you have a good enough system
  • If you do want to upgrade, then at least it is on your terms…

A Note

If I am paying builders’ margin so my builder can assume the associated risk.  As a home owner, I am giving the builder every opportunity to make sure that they conduct their investigations upfront.

Now if there are genuine items that you cannot fix, then be clear about them.  For example, rock excavation might be a little tricky to fix.  If your builder is transparent about what they include or exclude, then this is fine.

However it does not work when you include piering in the tender and then say that you will charge me extra in your terms and conditions.

I would strongly recommend you read this section of my blog to understand tenders better before you sign on the dotted line…

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