A question genuinely about my brothers build not mine!

he’s got a jct contract him and his builder signed stating a price.  No mention of estimate or variations etc in this contract.

the contract contains a payment schedule.

my brothers stuck to his part and made all the payments.  The builder is now saying that the price was an estimate and wants approximately 10% more for the contract.  This is not for changes my brother has made to the work, these changes have been agreed and paid separately.

he’s over run on the build and has exceeded the build timescale in the contract by approx 10 weeks. My thoughts are he’s trying to claw some money back for this –  the time overrun was entirely his fault nothing to do with my brother.

question is, is the builder entitled to do this?

Thanks.

Depends somewhat on which form of contract as there are various iterations containing various levels of design but most likely no the builder can’t do that.

there will be a clause in there for mediation, suggest your brother suggests that route in the first instance, it may be that the builder backs down.

Depending on the size of the builder it’s important to remember that often despite the large sums involved the builder often doesn’t take home much. I’m not condoning his attitude but if the job has cost a lot more than estimated and it’s a very small builder some give and take may be helpful. As with all these things there are to many variables to give a sensible answer here!

Great answer, thanks very much!

Fixed price, lump sum, guaranteed maximum price (GMP) are all examples of JCT pricing – and all are different.

There are others.

Does your brother know what form of contract he actually has?

If he wants a software subscription the help with that, I can help.

Thanks again!

The contract he has says at the bottom

“building contract for a home owner/ occupier who has not appointed a consultant to oversee the work” and in part D1 the price is simply listed at the price plus vat.

There’s no mention of any variation or estimate.

I suggested the arbitration route to him but that’ll be a few weeks away I think when the builder actually finishes the job!

If its domestic work chances are it’s a minor works form and will be fixed price lump sum. It’ll contain provisions for variations but that’s irrelevant really if there were none as such. It may also contain provision for withholding delay damages from the builder if he was late due to his own fault. Without having more detail it’s hard to know for sure but it sounds like the builder doesn’t have a contractual right to more cash, and may in fact be liable for damages. Is there not someone administering the contract on your brother’s behalf?

Edit – sounds like it’s the homeowner contract which doesn’t include for delay damages I don’t think but should still have variation/delay/loss & expense provision which the builder should be using if he thinks he’s entitled to more money.

Arbitration’s not where he wants to be by the way unless it’s a very big sum of money – it’s a proper legal and therefore not a cheap process. Some sort of mediation and possibly adjudication (if the contract provides for either) are better routes.

Are there any drawings or descriptions of the work to be undertaken in the contract? This is what the price in the contract will be based upon, and anything that the homeowner has requested to be built differently to that could be charged as ‘variations’. The builder should not have carried out any changes that the home owner hasn’t requested in writing.

It sounds like this contract: https://www.jctltd.co.uk/product/building-contract-for-a-home-owner-occupier

Without some form of drawings or specification it will be difficult to settle a dispute about what has been allowed for in the price so can we find this out?

This is not for changes my brother has made to the work, these changes have been agreed and paid separately

This bit concerns me a little as it sounds like some changes have been requested, not clear what it means by ‘agreed and paid separately’, if they were part of the build they should have been treat as variations under the contract as this may have muddled the waters a bit. They may have been paid for separately but they still could impact upon the time it takes the builder to complete the work overall so can’t truly be separated.

Ok, bit more information needed then.

so the agreed variations were items such as a more expensive external door rather than the basic job in the quote plus a couple of other similar upgrades. Nothing that delayed the build at all and nothing that changed the basic principle of the work at all.

my brother had architect and engineer drawings which the builder had and used to price off as well as inspecting the property beforehand.

The builder has said in writing that material prices have increased so he wants more money and that money is a substantial sum, more than 10% of the entire contract value.

we just can’t see how my brother has a signed contract with a price and the builder can say he wants more.

OP’s comments suggest it’s a proper JCT form of contract; that being the case, down a template of contract contents to see whether there is substantive compliance with the JCT.

Does the document – anywhere – state the pricing mechanism? By that I mean fixed price, lump sum, GMP or something else.

For reference, ‘fixed price lump sum’ is a bit of a misnomer as fixed price and lump sum are different.

Your brother needs to do some work to understand what he’s signed upto before talking further with the builder.

Is your brother managing the work/contract himself? I take it that’s the case based on the comment ‘…consultant not appointed to oversee the work’.

This could be an object lesson in the importance of appointing someone suitably qualified and experienced to manage domestic construction works; yes, it costs but…

Also, I meant mediation not arbitration earlier sorry  – I read somewhere it’s £144 to appoint someone (RICS I think) and you only pay for up to 15 hours time max.

Okay, doesn’t sound like those changes would amount to extra time being needed and I would very much doubt there is any provision for the builder to charge extra for inflation and supplier price hikes.

I haven’t used the Homeowner contract but I use the other JCT forms of contract every day. I can check tomorrow how this particular one deals with price changes but to be honest it sounds a lot like the builder is trying it on and I’d doubt they have much to stand on.

They’ll be reliant on people not understanding the contract or just paying up so as not to cause a fuss.

Same as airvent – I haven’t used the minor works homeowner form of contract but, based on having used JCT/NEC/FIDIC on client and contractor sides, I would say the builder is pushing his luck and assuming the client doesn’t understand the contract.

Additionally, there’s the implied risk to your brother that the builder will threaten to walk away in an attempt to apply pressure.

Thanks both. My brother was about to pay up in full by getting another loan before I suggested he actually looks at the contract he has!

Everything is negotiable and any claimed additional costs or increases would need substantiation. You can’t just demand money at the end of the job but then also you can’t ask for changes in the build/design and expect it for free.

There is always two sides to a story and sometimes a misunderstanding can occur which can then be blown out of proportion without any dishonest intentions.

I’d write up a timeline of events and then sit down with the builder to discuss them in order to come to some sort of agreement, never settle up until the works are completed though as you lose all bargaining power. Note that the builder may try to hold back completion certs until being paid but I’ve been advised before that this is actually illegal.

Thats a JCT Homeowners contract. It’s a very simple straightforward contract for domestic projects with lower contract values say sub £125-50K. The contract value can’t be amended unless there are changes presented by the contractor but agreed by the client. However there are lots of variables here, ie how detailed are the drawings, is everything specified, what are the extras and how have they been agreed? What sort of discussions have taken place about cost and time? What has been recorded and documented?

This sort of contract is there to offer a level of protection to both parties for small projects. It is definitely better to sit round the table and discuss things with the contractor before going down the arbitration route but there are mechanisms in the contract to resolve disputes.

The builder has of course presented full substantiation for his increased costs?

I’d expect the builder to provide a bill of quantities, with quotes to support his original contract plus invoices to demonstrate an actual variation in his costs. Whilst there were some significant cost increases during COVID, there’s actually been a decline in some material prices due to a slow-down in the construction sector.