Fixed price building work, but asked for more money. What would be the right thing to do?

[firesidechat]

The builders we have chosen have just started work on our new extension. They are knocking down the old dwarf wall conservatory and replacing it with a proper room. The contract is fixed price.

The builders are having a hell of a job removing the conservatory foundations. Under the deep concrete slab there is layer upon layer of old curb stones and after 4 layers they still haven't reached the bottom. It has taken them a week and a half using a pneumatic drill and still no end in sight. They now need to hire a sit on drill (or some such thing) and it has required more skips than they budgeted for.

The boss has just come round and asked if we can help them out with costs, but have no idea how much this will be. I'm very tempted to just quote "fixed price" back to them and show them the contract, but I do appreciate the unexpected costs are eating into their profits and that this is slightly unusual. We don't have endless amounts of cash and the most we would offer is maybe £1,000 as a good will gesture. If we do agree to pay some more we need to make it clear that this is a one off and we can't have an open ended project. Any thoughts.

They have been great builders so far - excellent time keeping, good communications and very hard working. They are also no trouble at all, refuse all drinks and food and keep themselves to themselves.

I think they are bring very honest with the situation and keeping open the communication channels. Yes you could quote back fixed price (and they should have maybe dug an excavation pit during the quotation process) but you are where you are. If I was in your position I think I would be inclined to have a meeting with the lead contractor and ask him what he expects. If you only have £1k contingency and he asks for £800 if it I would advise him that he only has £200 left for other undiscovered issues. I would be inclined to go back through the quote line by line to ensure that your expectations match the quote to avoid any other issues moving forward. As a general rule though, you do need 10% of the total cost as a contingency (not that uou have to spend it or declare to the builders you have it!) it does sound promising they are talking tk you but you need to be clear that you chose them for the fixed price aspect to avoid such issues.

Agree you have a fixed price but more skips and equipment will cost more and is unfair for them to bear this costs. Long as the skip etc is the actual cost without anything added on.

We do have more money available, but he doesn't need to know that and any leftover amounts are going on a new kitchen. We aren't hardhearted people, but the owner of the building company has said that he doesn't know what the extra costs will be and we can't work like that. I thought that was the point of a fixed price contract. I do feel sorry for them and don't want to sour the relationship so early into the build, so we are happy to pay something.

Ok thanks for the advice so far. I thought everyone would say that we were being taken for a ride. Do you think an offer of an extra £1000 is fair or are we being too harsh?

Agree with all Prada has said. Ideally they would have clarified at the outset the assumptions their quote was based on. My builder does this and I'm happy with it as our house is old and eccentric, and there have been so many 'surprises' that wouldn't reasonably have been expected at the outset. When he does speak to me about additional costs he always explains exactly what we're paying for and demonstrates that he's not making any profit above paying day rates and materials. Might be worth a similar conversation with your builder?

It might not be hugely helpful at this point, but I'd agree with a contingency budget of 10% - knowing our house I allow about 15%.

Thanks, you've set my mind at rest that additional costs are fair enough.

My work isn't construction, but we have clients and offer fixed prices terms. Based on assumptions of x y and z, and clearly state that we will bill for additional time incurred but discuss first.

Which is essentially what the builder is doing, so seems fair for me.

I woulnt offer £1000 I'd ask what the extra costs were exactly skip easy to find prices yourself to check. Does annoy when builders charge for hiring equipment surely a lot of time they would be having their own. Again happy to pay on seeing receipt for hire costs not allowing them to make profit on it. There is also extra labour but if they can still get job done in time frame not much else to add on

When you mean contract do you have a signed (jct) contract or a quote with firm pricing.

Groundworks are notoriously tough to price as you never know what's in the ground.I think you need to have a chat and so you understand the plan (additional plant and skips).There are routes here, the builder has a big financial loss or they cut corners on your build.If you trust them and can monitor the additional costs I think it's fair to pay more.

Skips can be £200, plant £200 per day so £1k gets used up quickly.

We have a quote and a signed contract with a fixed price. We don't have a problem with paying more, but he was being a bit vague which is understandable since they haven't got to earth level yet. I hate not knowing, that's all. He did say the skips are £200 a go. They should have almost finished the footings by now according to the builder.

That was my worry too Arfarfanarf.

£200 is spot on for a skip and I think that's a good sign however an extra weeks Labour and hiring more equipment may well push this over £1000. You need to have a very frank conversation and be prepared to pay more. Disgruntled builders rarely do a good job.

IME if you mention there is a contingency to the builders you may be giving a hostage to fortune and that money will have their name on it as far as they are concerned.

Are you project managing the work yourselves?

I guess you could call it project management and we've done it before. This one is a smallish single storey build and the building company is likewise very small. I do trust them, but our purse is not bottomless. I think we would go up to £2000 if we had to, but that's it as far as the foundations go.

You have to be reasonable. And so do they.

I think it's unreasonable of you to expect them to keep to a fixed price if it's far more work than they thought. However, it's unreasonable of them to not say how much more work it is.

It sounds like you're both reasonable people, and you're both doing the right thing. I'd tell them you need to know exactly how much more work it is before you can give them more money, but be willing to do so. Imagine the digger costs £150/day, and the skips are £250 each.