Getting a FAIR 'fixed price' quote for a ~£100k extension

[EzioSuffolk]

I'm about to request some fixed price quotes from several local builders for a ~£100k two-storey house extension.

But I've heard (over the last year or so) that some material costs have been increasing greatly.
How can I FAIRLY protect both the builder (main contractor) and myself from future significant increases in material costs?
I'd like to agree something reasonable with them *up front*.
I want to propose something that is reasonable and practical for them.

For example...
Would it be reasonable for me to say that I'll pay 75% of any increased cost *if the cost of the material increases by over 10%*.

Or will they expect me to cover 100% of the increased cost?!



Can anyone tell me what materials might have the biggest increases in cost, or is everything likely to be subject to significant increases in the coming months??
Bricks?
Roof Tiles?
uPVC Windows?
Floor Tiles?
Timber?
Doors?
Electrics?



Thanks for people's help.
Ezio in Suffolk

 

[ktuludays]

Why would a tradesman have to pay more for materials that they need for your job? I think you'll struggle to find anyone to agree to it

If a customer proposed this to me, I'd walk away

 

[johnny2007]

Any tradesman who doesn't give you a fixed price is going to rip you off.
In quotes it's common to find this "this quote is valid for 30 days only" or similar.
Then if you tell the builder what your budget is, you've opened the doors to a massive rip off.
The budget will all go and more; once you're dancing you go to wait for the end of the song before stopping.
Get a comprehensive fix quote and stipulate a staggered payment where the builder never has too much money in his hands.

 

[^woody^]

A quote is a quote. It's fixed price for the quoted works and only changes if the work content or scope changes. It really is that simple.

There are specific types of contracts that deal with variable works, but none of those would be appropriate for a domestic extension.

 

[cdbe]

~̶£̶1̶0̶0̶k̶

~£120k

Sorted.

 

[^woody^]

~̶£̶1̶0̶0̶k̶

~£120k

Sorted.

You've done this sort of thing before, haven't you?

 

[thomp1983]

I know a few builders and none of them have been giving fixed quotes for the last 12 months, they'll guarantee the labour cost and give an estimate for materials but as the prices are so volatile they can't guarantee them, but they are all happy for customers to find their own materials if there unhappy with the local merchants price

 

[ETAF]

i had 3 quotes for a cloakroom refit , last year, and they all would only quote for labour and NOT materials.

 

[mrrusty]

The way to approach this is to accept there is risk and front it up in a discussion with potential contractors.

You could either force the builder to take all the risk on a fixed price lump sum contract, in which case he will price the risk in and the quote will be higher, or you can take all the risk on a fully measured contract where you pay for actual time and materials consumed. This would pass all the risk to you. On a measured fully reimbursable contract the actual price paid should (in theory), be the lowest possible for the actual work done, but with the client taking the fluctuation risk, the end price cannot be predetermined.

There are commercial contract forms which share the risk - target price contracts - (e.g. NEC Option C) where there is an agreed mechanism for sharing the pain/gain for over/under target, but probably inappropriate for domestic work

With material prices being so volatile at the moment, I think a design and build contract against your scope and specification, with the builder taking the design risk, with a fixed price for labour and with materials priced @ actual invoiced cost value plus say 25 - 30% overhead and profit for the builder would be a reasonable possible model. That way the builder knows he isn't exposed to materials price risk and the quoted price should be a bit lower than a completely lump sum - fixed price quote. You have to accept a decent % OHP on materials, because the builder has to take his business running costs, contract time to order and collect, and any usual markup he would expect, in to account.

Alternatively you could take the design risk, by getting your designers to fully spec the complete build and the builder builds exactly to your specification - again be clear who is carrying design risk.

If you take an enlightened contractual attitude with professional contractors you will get a good deal, because both you and they will be confident you know where you stand. There isn't a right way or a wrong way to do this, all models are valid so make sure you have a good and agreed understanding on where the risks sit.

 

[kingandy2nd]

Key question is, how do you know it’s a ~100k two-storey extension?

I thought my extension would cost around 70k and the prices quoted were 80-120k…and that was pre-pandemic.

Material prices are crazy now, I’m glad I started when I did, otherwise it may have never got built!

 

[^woody^]

So do these builders give rebates when material prices drop? Bulk material discount? Trade account customer discount?

 

[mrrusty]

So do these builders give rebates when material prices drop? Bulk material discount? Trade account customer discount?

As ever, it's whatever the contract says.

 

[Deleted member 292770]

Is this a joke or what?

 

[mrrusty]

Is this a joke or what?

If that's aimed at my comment, then absolutely not. It's obviously not usual in domestic contracts to have variable contract prices, but of course in the commercial sector much more common. As soon as you move to e.g. NEC4 options c,d,e forms of contract the price is the defined (actual cost) of whatever plus the agreed % fee. It shares some of the cost risk between contractor and client. The defined material costs can be either predetermined or market prices. The same model is also used for calculating the price of compensation events (variations) in NEC fixed price contracts (options a,b)

In these crazy times where material costs are all over the place, to me it makes sense on big domestic projects to move to fixed prices for labour, but variable prices for materials so that the builder and customer share the risk either way. Whether anyone can be bothered to work that way is another story.

Sorry, all my experience is in the commercial world so maybe it just cannot work this way with domestic projects.

 

[johnny2007]

In my times prices didn't go up as fast as mow, but it still happened.
I always gave fixed quotes to customers, valid for 30 days and factored in a mark up on material (diesel and time).
Frankly I can't see a 100k project getting the builder on a loss because of material price hike.
Any builder would mark up the material by 10-20% (some even more), and the price is not going up by that much in 30 days.