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  1. #1

    Default Fixed Price or Cost Plus Labour Building Contract?

    A relative is getting quotes to construct a minor dwelling in Mangere. The best fixed price quote is over budget and they are considering letting the contract on a cost plus labour basis. I would appreciate advice on the pros and cons of these options and any other relevant advice. Thank you.
    Last edited by Bryanw; 21-08-2019 at 12:11 PM. Reason: Typo

  2. #2
    Join Date
    Jun 2013
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    2,116

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    Quote Originally Posted by Bryanw View Post
    A relative is getting quotes to construct a minor dwelling in Mangere. The best fixed price quote is over budget and they are considering letting the contract on a cost plus labour basis. I would appreciate advice on the pros and cons of these options and any other relevant advice. Thank you.
    The most important thing to remember is that with a fixed price contract the builder is taking most of the risk, on cost plus the client is. The more experienced your relative is with construction, the more likely cost plus might be a worthwhile option. If they are not, then fixed price will most likely be the cheapest way to complete the job.

  3. #3
    Join Date
    Apr 2009
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    979

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    Quote Originally Posted by elguapo View Post
    The most important thing to remember is that with a fixed price contract the builder is taking most of the risk, on cost plus the client is. The more experienced your relative is with construction, the more likely cost plus might be a worthwhile option. If they are not, then fixed price will most likely be the cheapest way to complete the job.
    I agree. For a first time a fixed contract will avoid costly lessons. You can learn a lot from this first project before doing your next project on materials and labour basis.

    Perhaps get some more quotes and tell them about your budget (less a contingency). Have your lawyer review the contract for your protection.

  4. #4

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    be organised.Get a strict budget with stages control the spend and if it blows out be prepared to stop. Give a bonus for under budget


 

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