Estimate vs fixed price for building work

Soldato
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We have some building work underway on the house which is being done by specialist carpenters as its a timber frame property.

We agreed a scope of work which was to rebuild a gable end wall which was in dire need of doing, and took them up on a fixed price which we had money in the bank for so knew we could afford. We kept 15% on top of that in case of further issues. We tried to keep more but you know, cost of living etc etc.

A good chunk of the work is done, but they've determined that the gable rafters also need replacing (in their current state, on of them is essentially a member in two parts which is undersized to start with and dodgily connected together), which in their mind is part of the roof structure rather than the wall so wasn't include in the original quote. This is one thing.

However when this was discovered about 3 weeks ago, he said the wood would be about 600 and then it would need a crane to get it in, but that would cost in the hundreds rather than thousands. We said OK, that doesn't sound too awful, send us a quote please for the job lot for us to consider. Meanwhile he put the wood on order.

Finally after us pressing we get an estimate last Friday for an amount that is 50% of the original quote - not a small sum of money. The email stresses that this should be on the high side and the job should very likely come in less than this.

This estimate is a lot, and not really affordable. We'd have to look at liquidating some things and doing a payment plan, which is all not very appetising especially given its basically a time and materials basis and we're in the lap of the gods as to the overall price. We communicated this and said we need some more certainty before we can continue, and that's more than and if than when. However they are adamant the work is essential and the roof isn't safe without doing it.

We asked if they can give a fixed price but they said that would have to be higher than the estimate, is that not very odd if they are describing the estimate as extremely high end?

We've had a really high level of trust until this point, the work done is great and they worked on the house previously and have lots of good references. But I think they are mismanaging this and it's putting us in a very awkward position.

They can't conclude the original scope until finishing the roof (in his mind) so we can't even look at getting someone else in really.

As of today he's on hold while we work this out and possibly losing working time.

Just looking for any general input on how to proceed. We knew it wasn't a risk free job, but at the same time by replacing the entire wall we really thought we wouldn't end up on the hook for anything like this.
 
That doesn't sound like a good situation to be in. If they say the work needs doing and you trust them then it probably does, we cant sit here and say otherwise really. In my experience estimates very rarely come in vastly below the stated figure, this is the only thing that has alarm bells ringing for me.
 
Look at getting someone else in to look at the roof part independantly and see if they agree with the scope of work?

While it might not give you an answer you want, at least then youll know if youre being had / mismanaged.
 
Totally agree with @200sols just to add getting in another builder to carry on can be a pain.

If they've done a quality job so far at a reasonable price then maybe it's best to get them to carry on but On the other hand there's nothing wrong with getting another quote from a different contractor just to clarify the work that needs to be done and estimate to compare..
 
Thanks for thoughts so far. Getting in someone who is qualified at such short notice will be tricky but it may be necessary to halt things to allow us to do that.

Just had an email back with a fixed price that is 30% higher than the "high end" (in their words) estimate value. So on the one hand they are telling us it's probably going to be less than the estimate value and the scope is well known (his words to me on site) and on the other, things are so uncertain that so quote fixed price we are looking much higher again. I am fully aware of why and how much higher you need to quote for fixed price, but the fixed price is just flat out well out of the range of affordability. Pretty miserable stuff!

Have just had to ask them to reconsider any other approaches that might be less invasive and therefore cheaper. And while not optimal, might still be feasible - i.e. A bit of a bodge job but that's all we can manage now. I am somewhat hopeful as I think he's resisted that approach so far due to having ordered materials and arranged crane etc, but that's his risk not mine as I never gave the go ahead for this extra work.

The other aspect is, if he's giving an estimate rather than a fixed price, am I entitled to have the materials itemised and know the daily rate per man that I'm being charged? I know this will appear high as it needs to cover indirect costs too, but just want to know what's normal practice on that.
 
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Thanks for thoughts so far. Getting in someone who is qualified at such short notice will be tricky but it may be necessary to halt things to allow us to do that.

Just had an email back with a fixed price that is 30% higher than the "high end" (in their words) estimate value. So on the one hand they are telling us it's probably going to be less than the estimate value and the scope is well known (his words to me on site) and on the other, things are so uncertain that so quote fixed price we are looking much higher again. I am fully aware of why and how much higher you need to quote for fixed price, but the fixed price is just flat out well out of the range of affordability. Pretty miserable stuff!

Have just had to ask them to reconsider any other approaches that might be less invasive and therefore cheaper. And while not optimal, might still be feasible - i.e. A bit of a bodge job but that's all we can manage now. I am somewhat hopeful as I think he's resisted that approach so far due to having ordered materials and arranged crane etc, but that's his risk not mine as I never gave the go ahead for this extra work.

The other aspect is, if he's giving an estimate rather than a fixed price, am I entitled to have the materials itemised and know the daily rate per man that I'm being charged? I know this will appear high as it needs to cover indirect costs too, but just want to know what's normal practice on that.
If it's a fixed price job you'd expect them to keep going at their cost for any issues that were blatently visible.

It would be a bit odd for them to supply man days and day rates on a fixed price job; in my experience.

Are you sure you are getting a proper fixed price job and not just a chancer? I'd expect written terms and assumptions for a fixed price job.
 
If it's a fixed price job you'd expect them to keep going at their cost for any issues that were blatently visible.

It would be a bit odd for them to supply man days and day rates on a fixed price job; in my experience.

Are you sure you are getting a proper fixed price job and not just a chancer? I'd expect written terms and assumptions for a fixed price job.
The issue was definitely not visible ahead of the work done so far, that's the problem. They did semi invasive investigation for us at no cost before which showed up enough problems to warrant the original scope. But you never could have expected to find this issue until you got properly stick in.

They aren't providing day rate on a fixed price, they are just wanting to do the further work outside of the original scope on a time and materials basis.

He is by no means a chancer, he is a great bloke but we are just struggling to find a way forward here.
 
The issue was definitely not visible ahead of the work done so far, that's the problem. They did semi invasive investigation for us at no cost before which showed up enough problems to warrant the original scope. But you never could have expected to find this issue until you got properly stick in.

They aren't providing day rate on a fixed price, they are just wanting to do the further work outside of the original scope on a time and materials basis.

He is by no means a chancer, he is a great bloke but we are just struggling to find a way forward here.
It's tricky mate. If you agree no one could have spotted the further work, I'd say the existing agreement is in play but this new work is a spanner.... to press on sounds wrong.

Sounds like the right thing to do is get the work done.

If it really is an affordability issue, is there anyway he can move onto other jobs for you to get funds together?
 
To put it shortly if you ask the builder to fix the price, you are asking them to fix the risk into their scope.

Therefore to cover themselves they will have to cover the full amount.

Of course, some builders/people may see it differently but it's just attitude to risk /reward. It doesn't seem unreasonable to me but you've not provided much context /what the job is. As I understand its fairly standard in roofing to have "risk" type costs
 
Reading your subsequent posts it seems like you took them up on a fixed price which presumably also has this 30% 'premium' just in case they find some hidden nasty that wasnt obvious? Otherwise why pay 30% more? Tricky..
 
Reading your subsequent posts it seems like you took them up on a fixed price which presumably also has this 30% 'premium' just in case they find some hidden nasty that wasnt obvious? Otherwise why pay 30% more? Tricky..
At that point it depends if you classify a gable rafter as part of the roof or part of the wall, as the original quote covered wall but not roof. Note the building has 3 large trusses along the length, it isn't made up of a large number of flimsy trusses with small sections like modern houses.

All fixed price quotes should have contingency in for the contractor (to cover risk), as well as having to build on profit and indirect costs, that's standard and I know that.

Feeling increasingly like I'm just going to have to take the plunge and scrape together what I can and hope. Goodbye savings hello debt...
 
I'd think you should be able to request for an itemised list. Material costs might be well out of your control, but if he's now upping the labour rate, or substantially increasing the number of labour hours then that's more of an issue for him than you.
 
At that point it depends if you classify a gable rafter as part of the roof or part of the wall, as the original quote covered wall but not roof. Note the building has 3 large trusses along the length, it isn't made up of a large number of flimsy trusses with small sections like modern houses.

All fixed price quotes should have contingency in for the contractor (to cover risk), as well as having to build on profit and indirect costs, that's standard and I know that.

Feeling increasingly like I'm just going to have to take the plunge and scrape together what I can and hope. Goodbye savings hello debt...
At the end of the day the 30% increase is who owns the contingency. You could read it as he's holding the contingency at a 30% premium to you, but within that could be a lot more work than if you held the contingency (he's holding it in cost, you're holding it in cost plus margin).

If you don't have the contingency liquid in the first place, YOLO and go T&M on the extra work.
 
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