Builder discussion about variations

Hi Sanjay, Your answer re driveway concrete makes it more clear, but still not sure whether you think 10mm or 30mm aggregate to be better. Also lots of other factors like access, inclusions (colour, shell etc), subgrade, reinforcement, finish (brushed, exposed agg etc) could affect price. I think best to get concrete layer to visit site and quote. Or you’re likely to get unexpected costs cropping up when it’s too late to argue (like before). Regarding one below, I agree with what Jane H said. You should have understood/sorted this out at Contract stage. I’ve written on this blog before suggesting the Contract is the first thing you should get sorted, before paying any money (or at least only minimal amounts, you can afford to write off to experience) for designs or anything. If you enter ctrl+F you’ll get a search box. If you enter things like PC, Provisional etc you find I’ve explained before the difference, and how they’re supposed to work. But Jane H’s link explains it quite well, the confusion that often occurs and how they’re often used incorrectly. Usually PC (Prime Cost) Sum is an amount for something like an appliance, carpets etc which is sure to be required, and where Builder puts amount for one he intends to use. But you have the option of choosing something more or less expensive, and paying accordingly. A Provisional Item is for something that may or may not be required (usually something like earthworks excavation or fill). Builder puts in (with your agreement) a reasonable guess at final cost. If not required you pay nothing. If required you pay what it costs. Whether you can demand invoices etc generally depends on the contract wording. So regarding your driveway, obviously you needed one, and presumably the area required. So normally the whole thing could have been priced at contract stage. But possibly some builders have a contract where the basic spec includes for a certain area that should generally be enough, but not enough for your case, and possibly very standard type with brushed finish plain concrete or something. So he ticked driveway for part, then put in a PC Sum so you could choose (and pay for) whatever extra area and standard you wanted. Not a totally unreasonable way of doing it, as long as all concerned understand how it works. Similarly a ticked item for quantity of Earthworks he normally included on all builds. Personally I would have made any extra earthworks a Provisional Item, if not certain it would be required. Because the amount of earthworks is something dictated by the design, ground levels and whether any unsuitable material etc has to be removed. So not something where you can ‘choose’ anything. It is what it is, and you have to pay for it. Of course you would hope all prices charged are reasonable for what was done. But often difficult to dispute if you haven’t tied things down at the beginning.

Hi Sanjay, I assume you’re the same Sanjay who asked about PC Sums etc. In which case you’re certainly making life/building even harder by trying to do it while overseas. And even more so when, with respect, you seem to have very limited knowledge of building contracts, and how these things work. I can’t see why you can’t call concrete layers from overseas if you get the timing right, but you could always try emails, or presumably you have someone in NZ (your Project Manager?) to call them. But when you mention a difference in cost between ‘finest’ and ‘average’ quality you’re entering a very difficult area. I doubt that many of them would offer such differences, but if they did how would you define and measure it? Or do you just think you’ll know it when you see it, and hope the builder will agree if you say it’s not up to standard? I’ve worked on Government construction jobs where all such things were defined in great detail. But the result was an overall Specification that was 50mm thick. And even then there were disputes. I guess all concrete layers would say their work is perfectly fine for a driveway. Some would be telling the truth, some would not. Unfortunately when you’ve got 15-20 cubic metres of concrete driveway going off outside your house it’s too late to argue about it. Best bet is to find someone who’s done a job you like on another house, and pay what you think is a fair price.

@Jane H, thanks, helpful tip and link. I have only 5% last ‘stage payment’ to make from the Payment schedule. Appreciate that anyone advising would need to see the contract. And I had shown it to two lawyers one of whom I had to keep asking questions for him to go beyond a cursory reading so I went to the other one. I didn’t find them commenting much on the finer details. Wd you be able to say anything on some of my questions, ie, – Should an item like Earthworks or Driveway be ticked as included in the contract (which should mean within the contract value) and be added as a PC sum too. If yes is that PC sum then only to cover costs of any upgrades I add after contracting? – If the approved EPA plan shows a full driveway and the builder claims he is doing the driveway as per plan, can he then say he had contracted only for the two new houses behind the old one and so will pay for part of the driveway? It seems bizarre even to work out the parts of a driveway in this way. Many thanks. Sanjay

Hi Sanjay, This may be of more help to other readers but the time to get advice is before you sign a contract not near the end of a build. Without seeing your contract nobody here will be able to give you accurate advice and I’d go so far as to say you should take most of your advice from a good and experienced contract or construction lawyer. However, the following link has a good short explanation for PC sums, which may help you or others to read: https://buildingtoday.co.nz/2009/08/01/potentially-confusing-pc-sums-discussed/ The only thing I’d add is that you mention having ‘paused’ paying some invoices. Unfortunately, in the eyes of a building tribunal adjudicator this may have put you in the wrong regardless of whether or not your contract was unfair or misleading. There is a clearly defined mechanism for not paying a builders claim called a payment schedule. Here is a another useful link, but again I’d seek professional advice: https://buildingdisputestribunal.co.nz/adjudication/guides-and-resources/the-payment-regime/ If its any consolation driveways are often an issue and if you have got to the point of having two habitable or nearly habitable houses that have passed inspections you have done better than a lot of people embarking on a build in New Zealand.

Hello everyone I am building two adjoining houses behind my old cottage at the street end, on a large section. The build is almost over except for remedial work like hot water not coming through, a toilet cistern not filling up). I am looking for advice on the following: My builder had the driveway included in the contract (as a ticked item in the Specifications document accompanying the contract). He also had Driveway as a PC sum in the contract. 1. Is that ok? I did not know then but now I think if it is included in the contract it should not be a PC sum. Am I correct? Also, he now says the whole of the PC sum on the contract needs to be paid as he has spent more than that amount. 2. Is there any use asking him to show invoices for the driveway construction now because I wouldn’t know when they are obtained? 3. I had earthworks also as an item included/ticked in the Specifications document of the contract. It was also mentioned as a PC sum. Is that correct or was I wrong in signing the contract in this way? 4. I have paid for all the earthwork separately and it has amounted to more than twice the PC sum considered. Should I have paid for all the earthwork? 5. Also, now the builder is saying that he had contracted to build only the two houses at the rear. So should I be paying for the driveway for the front half of the section? Is this ever done? I have paused paying some invoices and want the driveway charges sorted out as the others are more straightforward. After all this I will have the last 5% instalment invoice and all fees (LINZ, lawyers, 223, 224C, ccc and title and other fees) still to incur. I am feeling a bit stuck with the builder payments. The two new houses have passed final inspection and I have got them insured in my/trust name and have got tenants in one and imminent in the other. Would be grateful for any advice on the questions above. Sanjay

Hi Asri & Jane H, This question about some problem with installing bidet taps (the technical arguments are not clear to me, maybe someone can explain) seems to have been going on for a while. So I’m a bit puzzled as to why you don’t just ask the builder and/or designer to explain it clearly. I see no reason why a builder should object to that. Or you ask the same person in Council the builder spoke to. Regarding making ‘minor changes’ to consented building plans, you can try looking at: https://www.building.govt.nz/projects-and-consents/build-to-the-consent/making-changes-to-your-plans/minor-variations-guidance/examples-minor-variation-or-amended-building-consent/ As it’s very difficult to advise on cost and time required to make changes, without knowing exactly what’s involved. So general questions to this blog are unlikely to get you the answers you need.

We had a bidet spray tap (hot and cold water) installed in Wellington in 2020. But it would have been consented in 2017 and it was included in the plans lodged with the council. Have the regs changed in this time? Is this something that can differ from council to council? Is it because it’s just a cold water tap? Or the type of tap itself? If you can get more information, you may be able to find a work around. I would contact the council directly and maybe even a plumber. But I would do this discretely because as you said your build is in the final stages. Builders often create difficulties in the final stages of the build, this is because they have realised by then that it’s going to be inconvenient for them to actually finish to the original agreed timeframe, cost or both. The reason I suggested making discreet enquiries is that if the work is otherwise going well, it’s best not to ruffle the builder’s feathers if you can avoid it. They can be an excitable lot and given to inventing variations, reasons something can’t be completed and/or was never included/costed in the first place when they feel under pressure in the final weeks or months.

Hi Sophia, I was hoping someone else might try answering this one, because from the wording I assume you have not built in NZ before, and probably do not have much experience of building and building contracts generally. To answer it properly would require a book (Mark, who runs this blog, can suggest some), and even then you might still get into trouble. But please make sure you do your ‘due diligence’ on this, because wrong choices can literally ruin your life. You can bring up a ‘search box’ on the blog using Ctrl F. Nothing I could see on Framoh. Versatile a few comments, some good, some not so good, but will depend on which branch of the franchise. ‘Big builder’ vs ‘Plans/smaller builder’ entirely depends on which big builder, which plans/smaller builder. Some might say former can handle everything for you, but many (of course not all) can be rip-off merchants who couldn’t organise the proverbial p..s up in a brewery. Latter can be better, assuming your plans are realistic, but again only if you choose the right one. I suggest you use the search box above, and put in words like franchise, contract, PC, Prime Cost, fixed price. Also ‘MJ’ (he has written a lot of sensible stuff), and my name, previously just ‘Chris’, and later ‘Chris C’, as I’ve also written on some of these topics before. Regarding going over a quote, please believe that most stuff you might be told about fixed price contracts will turn out to be untrue. Firstly because most contracts have ‘weasel’ clauses that allow builders to increase the price, secondly because construction is by its nature an uncertain game, and things just go wrong, but often because you will be tempted to make changes (variations) that will increase the cost. I’ve said before, that if you start a job with less than 10% of the original quote as ‘contingency’ money in the bank, then you are taking a risk you will run out of money before the job is finished. That’s just the reality of building. On that basis your friend, who ended up $70K over the quote, may not have done too badly if they got the house they wanted actually finished to a good standard. You only need to read this blog to find out many people would envy that outcome.

Hi LM I’m having variations and cost overruns coming and they are not breaking down details. I’m not sure what the reason is for not being transparent, all I can think is that they are charging a ridiculous amount of margin and don’t want to disclose it. Although the contract specifies a %age margin there is really no way to tell. If they are reputable honest builders I would expect that they should fully transparent with a breakdown. Otherwise they are just lazy and overestimate the price hoping that it should cover the job.

PC Sums are fine, if supported by quotes (PC quotes) or by quantified amounts eg 65m2 of concrete at xx/m2.

Hi Marie, I can’t comment on the three builders you’ve named. But of course lots of builders will express ‘concern’ about ‘PC sums’ in another builder’s quote, especially if they assume you don’t really know what they are, or how they work. Their concern could partly be for you (because sometimes these are ways for builders to give a low quote, and then increase the contract sum later), and partly to scare you into going with another builder (ie them). First you need to make you really are looking at PC (Prime Cost) Sums, and not Provisional Sums or Items. I’ve tried explaining the difference before, so you could try CtrlF and searching. Also you could look at https://www.mbawa.com/prime-costs-and-provisional-sums/ which explains it very well. By definition Provisional Sums or Items are potentially more problematical (but sometimes useful and almost unavoidable in a contract), because they are for work (commonly things like foundations and earthworks) where the extent and difficulty cannot be accurately assessed before the work starts on Site. But you can reduce the risk, for example by getting fixed rates for provisional quantities (cost per hour/per cubic or linear metre etc). Generally true PC Sums should be less of a risk. Because they are a sum of money put in to supply a specific item. Examples would be an oven, carpets or even a whole kitchen. As long as you know the amount in the PC Sum, and the exact type of item you would get for that if you make no changes, then it gives you the chance to upgrade (or theoretically downgrade) and just pay the difference in cost between the PC Sum and the cost of your chosen item. Where it can lead to shocks later, is if you let a builder persuade you the PC Sum in the contract will get you something wonderful, without realising it won’t get even close to what you want/need in your new house. We return again to the need for due diligence, and checking out exactly what it says in the contract.

Hi, It will all depend on what is written in your contract. Majority of contracts used are heavily in favour of the builder so if you look over it and are still not sure I would seek advice from your lawyer as this may not be the only instance of a variation you come across especially if the problem stemmed from a design flaw in the plans and the change was not of your making.

You can ask for invoices related to Pc sums usually. Master builders contract says if you ask for more data and invoices on PC sums the company has to provide them.

Hi Shane, I guess yours is a response to James Chapman’s post on Sept 19, 2021 (not 2022). MJ and I both made some comments at the time (try hitting Ctrl F, and putting ‘Hi James, Usually I agree’ in the search box. It will bring up my reply, and MJ’s are close by). Unfortunately I don’t think we ever got a response from James, so no idea whether he ever took the deal, or how it turned out. But for others considering something similar, I suggest they look at my reply mentioned above. I realise your reply was sent in good faith, to try to help out. But as I said in my reply, it’s much more complex than just a straightforward accept or reject. It could be a mistake, or it could turn out to be a very good deal, but as the old saying goes ‘The devil is in the detail.’. Also, be cautious about assuming it is automatic that you can ask for information and a breakdown on the final cost of Provisional Sum items. As with everything else, it depends what it says in the Contract. Several people have written to this blog, unhappy because their builder won’t give them that kind of information. As I’ve said elsewhere, Prime Cost (PC) items are different, and not generally intended to be used for things like earthworks.

We’re building with them right now as well. The whole process is quite dreadful after we signed the contract. Because this is our first time build, we’re not sure if it’s because we chose the wrong company or due to this particular pandemic caused environment, that’s why I’m here asking anyone’s experience with Build 7. Have you been asked to pay ridiculously high variations during the build? Thanks

Hi Rachel, It would be unusual if a builder lets you ‘draft’ a contract entirely to your own liking, but I guess more unlikely things sometimes happen. More likely they will want you to use a contract form supplied by them. And if you’ve followed this blog for long you’ll know that many (most?) of them will be reluctant to change anything much. But anyway I suggest you start by hitting Ctrl F and putting things like ‘contract’, ‘PS’ and ‘Provisional Sum’ in the search box. When you look through the many entries that come up, it may lead you to other words to search for. Also check the Building Regulations for the minimum requirements for contracts over $30K, and the NZ Standard form of building contract. Consult an experienced lawyer, or maybe QS, if you have no experience with drafting building contracts. It can be very expensive and stressful if you get it wrong. I would advise you don’t give a builder any money, or at least no significant amount (ie more than you can afford to write off to the cost of buying experience), until you’re satisfied with the contract wording. Many builders will try to persuade you it’s something that can be sorted out later. But if you do pay money for things like concept drawings, or site surveys or investigations etc, make sure that you have a share of the copyright, and can use the information if you pull out and go with another builder.

Hi Simon, Thanks for response. It was someone else who suggested a solicitor, but anyway interesting but depressing comments from them, and good advice, although it then puts you (and others) in a difficult position. Build now while it seems builders can do what they like, or wait. Building is a very cyclical industry, and I might turn down quite quickly, and then they’ll be going bust or begging for business. But not everyone is prepared to wait. So maybe part of the test for ‘trusting your gut’ is to try a conversation about the mortgage clause, builder being responsible for his own blunders etc, to see whether the builder actually thinks they’re fine, or admits they’re unfair, but tries some argument like ‘of course we never actually implement them that way’. If the former you know you’re in trouble if any disputes come up later (he will try to defend the indefensible), and walk away! If the latter, then ask if he’s at least prepared to confirm that in an email, so he (or his staff) can’t deny it later. Surely no reasonable builder would refuse that. In my experience getting a CCC yourself is illogical and very troublesome. The builder is in a much better position to get all the paperwork (Producer statements from subbies etc). In my view they cannot claim a house is properly finished and ready for occupation until you have a CCC, and it’s not impossible, but I think more difficult to insure, if you don’t have one. I would check with a lawyer on that, but personally I’d consider it extra money well spent to get the builder to deal with it. I think we paid about 15% margin on variations, but an on-line check indicated 20% is quite normal. I can’t see how they can justify it being on more than they actually paid for materials or work done by others. Some theoretical retail price seems quite illogical, but I guess it all depends on what it says in the contract. If it doesn’t say, then again ask them to put it in writing before you sign the contract.

Yes, as usual Chris you are the level headed one and I just react first and think later so sorry James if I alarmed you but I suppose the whole thing hinges on your contract as it stands now. The last build I did I got several different quotes from builders and building companies and one thing that I remember was that each had it’s own version and variations as to what constitutes a PC. Some were more confident at setting prices on certain things while others were not but not one of them was the same and the only thing that was similar, which our lawyer always found (bless him) was that the wording was vague which was intentional for many of these outfits. We asked for changes to the wording, 99% of these quotes said No, we never make changes to our standard contracts and we walked away. Simple. So if your contract has clear definitions of what they consider to be a PC then as Chris pointed out, it’s probably not a bad way to go especially given the state of building materials and transit delays etc at the moment. The issue I had (and again I apologise for not making this clearer and sounding all doomsdayish) is that this offer has only been presented to you now and by the sounds of it you are well on your way to putting in your first pile? Please correct me if I’m wrong. I see an awful lot of people become over-invested either financially or emotionally in their build before the due diligence is done, only for the terms to change at the last minute and they feel they have no choice but to say yes and keep going because they would lose too much to say no and I don’t want this amended clause to be like that for you. As Chris has said numerous times, to walk away from $5k’s worth of drawings etc because the contract is sub-par could possibly save you $50k down the line. Get your lawyer to look over it, even be the devils advocate and argue it’s pros and cons with you. I know at the end of the day $30k is a drop in the ocean compared to what you’ll eventually part with but that’s all your landscaping, fencing and perhaps decking funds so take the time to think it through. Don’t let them rush you. If they put pressure on you to accept before you can do some sums then maybe it is a little hinky? Let us know how you get on?

Hi there I read your post and comments about how deceptive the Building Companies are. I have had a similar experience and it was a costly and painful one. You think you are signing up with a reputable company, that prides itself with honesty and integrity, but in reality, they are not. In my case, the contracted price which was based on a concept design changed dramatically. The Building Company refused to provide a detailed breakdown on the price variation and sighted that this information was ‘Trade Secrets.’ I then had hired a Quantity Surveyor to independently price the Contract and the results were absolutely alarming. QS found the Building Company substantially underpriced the build to lock you into a Build Contract and once you sign up, they then rectify the under-pricing with a substantial increase to the build price. The disappointing thing is that Building Companies can do this because the Contract is based on Provisional Sums and Provisional Costs. I could go on, but this company is already paying a big price for its dishonesty and lack of integrity. All the staff including the sales reps have left and there is lots of talk within the local community about how incompetent this company is. This company is an embarrassment to the Franchise. It is only a question of time when this Company complete folds. The Law of Karma!!

Hi Sanjay, Happy to comment if it helps. To answer both your questions regarding architects/engineers fees, I guess it would depend a lot on where you live, the type of firm you approach, how ‘qualified’ people are (actual architects, or architectural designers etc), and how ‘architectural’ the design is. I think generally an architect/architectural designer would do the majority of the design, and co-ordinate Consent submissions etc. But get advice/input from a structural engineer on things like beams/lintels/foundations etc, and maybe special bits of framing such as in high wind zones. At the time I built it (about 5 years ago) seemed you would be lucky to get all the above input for much less than about 5% of the build cost, or maybe $40-50K. But then maybe I grossly overpaid, because I’ve seen people on this blog claiming that a friendly designer they know did the whole thing for a great deal less. And of course don’t forget that if you make any variations during the build it may involve more architect/engineer fees, and there may also be engineer fees if he/she needs to do site inspections during construction. As Sarah (presumably from a small building company) has just kindly pointed out, nobody can work for nothing.

Hi Sara, Really sorry I am a month late in replying. I really hope for your sake it is not to late. I have posted a number of times on this site regarding my experience with Signature Homes Auck North Shore. I hope you searched the site and have seen those comments. I could write a book on all the problems I had with this franchise. It would be easier to write about the positives as there is only one. I met a couple of good tradesmen who I became friends with and they helped me ultimately fix up the dogs breakfast of a house which Signature handed over to me. Neither of these guys worked for Signature after my project. If you are a good tradesman then you generally don’t work for the franchises as they pay poorly and force you to rush through your work in order to make any money. I will bullet points some of the major issues with this franchise for you to be aware of: 1. Dishonest at every level in the organisation. 2. Project mangers who take short cuts and hide problems in order to meet imposed time frames. 3. Rip you off through high PC sums etc and ultimately cost you way over budget. 4. poor communication – have to chase numerous times for an update. 5. Slow progress. Took two years to build a simple house. I hope this helps. Chris.

Hi Kato, I see there have already been a couple of replies to this. I basically agree with Peter Quinn that this looks like one to walk away from. But having said that, I think that his suggestion of ‘eliminating’ PC (Prime Cost) items may be slightly over simplifying things. I can see where he and Neville Nair are coming from. A builder who wants to put in PC items, or PS’s (Provisional Sums) for the range of items you mention, and is not even willing to try to reduce the number, does not sound like a person you want to get involved in a build with. But even with consented drawings (assuming you’ve got those before signing a building contract) both PC’s and PS’s can often still be quite useful in a contract. A PC item is an amount of money allowed in a contract for the purchase of a specific type of item, where the client gets to choose the item, and whether to spend more, or in some cases less, than the PC. If it’s less you should get a rebate from the builder. So for example you know you want a gas oven, and the builder tells he will supply model X for which he will charge $3K as part of a fixed price contract. So when you sign the contract you put in a PC of $3K, because you want to wait to see whether new or improved model comes out before you install your kitchen. If the new model costs $3.5K you pay the builder $500 more. But the important thing is you get to choose how much to spend. PS’s are different. They are generally for the costs of work/things which it is not possible to accurately predict at the time of signing the contract. They are often used for things like foundations and earthworks, where the engineer may need to look at ground conditions after excavation, to determine pile depths or removal of unsuitable material etc. But rather than just put in a sum of money it is safer to put in a Provisional quantity at an agreed rate (eg Provisional quantity of 10m of 400mm dia piles, at $2K/m). Then you just pay for the amount installed. Of course all of this requires a builder who not only knows how things are supposed to be done, but is willing to do them. Maybe the next guy you go to will be one of those. And Neville is right, he probably won’t be a big franchise builder.

Hi Chris Respect your comments however my intent to focus on a couple of products in the 5 minutes I had this morning to make comment should be read as an over aching comment of caveat emptor ‘Let the Buyer Beware’ Do your homework and ensure you are being advised by a sales professional who has the technical knowledge to advise you correctly. Most don’t and through the sales persons lack of knowledge, land unsuspecting clients into cost over runs throughout construction with unrealistic PC Sums and not having the knowledge to create a specification that reflects the clients expectations in the first instance .

Hi Nigel, Thanks for your thanks. I totally agree with everything you say up to about the middle of your first paragraph. But after you said ‘I have yet to build … ‘ you said some stuff that concerned me, as in my view it’s a bit misleading for those not experienced in the building business, and kind of contradictory. In your last paragraph you seem to doubt other peoples’ words that builders can do a poor job without actually being fraudulent. This of course is not true. I assume fraud is a crime, and you could get the police involved. But I doubt if many cases of poor workmanship, failure to complete on time etc, would fall into that category. Having said trying to amend contracts to make them more ‘neutral’ is just too hard, or even impossible, in your last sentence you point out that many ‘technical issues’ (by which I assume you mean things like poor workmanship, arbitrary changes to design/materials, extra costs for variations etc) happen because the contract either does not prevent them, or does not give the client enough power to demand that the builder put things right. So you have given a very good reason why anyone going into a build cannot afford to accept it, when a builder says an unfair or biased contract cannot be changed. If they say that then in my view they are the wrong builder for you. I’ve spent much of my career writing and supervising major construction contracts, and I agree that many NZ building contracts can be understood by most reasonably intelligent people. But the problem is that many of those people ‘don’t know what they don’t know’ as the saying goes. Understanding it is one thing. Knowing what’s not in it that should be, and knowing what may lead to trouble later, is something else. I’ve written about this in this blog before. You should look at the builder’s contract before you pay them any money for anything, and if they’re not open to making changes (of things you or your lawyer think are unfair, or have been omitted) then walk away. I believe there are standard minimum requirements for a NZ building contract over $30K, but it’s worth looking at NZS3902:2004 (Standard Building Contract) for an example of the kind of thing you should be looking for, although I know there are other standard forms that some people recommend.

I also would also advise to go with smaller builders. You will get a much more personal approach. Builders I would recommend (and have had personal dealings with either building myself or in a professional capacity) are: Greenland Homes, Peter Ray Homes, DNA Structures Limited, Que Homes, Quinn Homes, Paul McStay. I would say all of these are honest and reliable builders with good designs and good spec for your money. Ask lots of questions, make sure you know exactly what is included and that they have had actual quotes for work as per plans rather than including lots of PC sums etc.

Hi Guys, Yes I would definitely steer clear of building franchises and look locally. Generally builders who are in your area are less likely to “shit in their own back yard” sorry to use such a vulgar phrase but it’s fitting, and start interviewing them and do plenty of research on them. Don’t take their word for anything, get names of people they’ve built for and talk to these people and see the work in person ( I must stress the in person bit, it’s been known for some builders to give false names and fake pictures of their work) and then you should get a true idea of their standard of work. Get LBP numbers and names of everyone in their company who is licensed and search for their wrap sheet on the LBPB website, see if it’s clean but that’s not always a sure sign that they are neither good nor bad as the LBP are a bit of a joke to be fair but it will add to the overall picture. Don’t trust Master Builders either, they are only designed to protect the builder which is of no help to you whatsoever so don’t be taken in with logos and guarantees, they mean nothing if your contract isn’t right to begin with. Don’t sign anything and do not hand over any money for anything, this is all just the research stage so they shouldn’t be asking for either. Once you have a few narrowed down, then I would be asking for their contract and this is when a little money spent now on a good construction lawyer will really pay off big later on down the track. If your lawyer suggests changes and the building company won’t budge on any changes it’s safer to cut your losses and walk away even though you know you won’t get your legal fees back. The alternative would most definitely be worse I can assure you. If you get to this stage you may need to think about drawings & plans etc now. Most building companies will charge you for this and I would read through this website about the pros and cons of paying for them and who actually owns them even though you probably may end up contributing 90% of the design input yourself. Chris C and Chris have some really good advice on here about that, and Chris C also has a lot of input re contracts etc so search out their posts. Someone on here has also mentioned several times a finance company that is perfect for building with. They vet the builder, his insurance, his liabilities etc and if he’s too dodgy they won’t lend you the money to build which is perfect, that’ll sort out the scammers and find the bits you may have missed in your research at the beginning. All variations they want to make have to follow their very strict processes and their progress has to meet their standards otherwise they will not hand over any money and if I was building again I would most assuredly use this company. I’ll try to find the name of it and get back to you. Otherwise that’s probably enough to get you going and no doubt others on here will add lost of useful stuff too but smart move for getting on this website first. I only wish I’d found this before I started my build, it would have saved me $$$ and a lot of tears. Good luck!

Hi Sarah, I’ve mentioned before on this blog (but not many people seem to see it), that in the notes at the top it suggests that if you want to check on a particular company name (or other topic) just click ctrl-F, and fill in the name in the search box at the top right-hand side. It will highlight it throughout the blog. There are quite a few references to Jalcon, some good, some not so good. But please note that they are a franchise builder, and there lots of comments on the blog (mostly negative) about using those. We went quite far in the process of building with them in the SE Auckland area. But did not in the end, because we decided we didn’t like the location our section was in, so we sold it. Their plans were quite good, and things looked promising regarding price. But we (my wife especially) felt the salesman was a bit too pushy. And certainly he was fond of saying things like, ‘We can easily build that (eg stone garden wall and gates) for $10-15K.’ But later when asked to give a specific quote based on a drawing it became $40-50K.’ So if you do go with them make sure you tie down the costs based on exact details, don’t just accept rough estimates or provisional sums for how much something will cost. That applies to all builders of course, unless you have a good relationship with them, and real experience that you can trust their estimates.

Hi MJ, I’d like to come in on this one again. All good questions about how many qualified/skilled builders will be working on the job, or at least how often they will visit the site. Perhaps a bit difficult to pin down in the contract. I guess you could ask the builder to name the people they intend to use. The good/honest ones will tell you the truth. The others will always have some excuse as to why their promise is no longer possible (he resigned, got sick, too busy etc etc). I think this is where due diligence comes in again, and the need to look at as many of the builder’s previous builds as possible, and talk to previous or current clients, to judge whether the standard of workmanship is acceptable to you. Regarding the point about sub-contractors, I guess virtually all NZ builders use them for some or all of various specialist jobs like excavation, concreting, drainage, roofing, joinery, electrical, plumbing, kitchens, tiling, bricklaying, flooring, painting etc etc. And in some ways that’s a good thing, because each subbie should be more skilled at his trade than a general builder. But the essential thing is that every contract should contain a clause to make it clear that the main builder (ie the one you sign the contract with) is contractually entirely responsible for all aspects of the subbie’s work (giving instructions, providing necessary access and assistance, workmanship, progress/delays, payments etc) as though it were his own workers. Take no excuses that this is in some way ‘unfair’ on the builder. It’s their choice to use a subbie, so they need to choose them wisely. Any builder who thinks it’s too hard on them has no experience of how the building industry is supposed to function in the real world. It follows from this that the client should resist the temptation to get involved in any discussions with a subbie (or in fact any worker on the site) that might be interpreted as giving them an instruction, especially one that might be considered a Variation. All instructions should be given by the builder’s Project Manager, so the builder is fully responsible for everything that happens on the site.

Aside from the contractual and PC sums issues it would be nice for Colleen to comment on the physical building side of their franchise. Such as, will there be one dedicated licensed builder on each build that regularly visits and overseas the build and is this the person the same one who will sign off the Record of Works? If this licensed builder is to supervise restricted building work and not do this work themselves then the question needs to be asked how often will they visit the site? Many franchise companies only have one licensed builder on their books and if you have several builds on the go at the same time often the visits are not frequent enough and in my experience, one you have a problem or the workmanship is poor, it takes more money and time to find and rectify the problem if it’s not caught early on in the process which will delay the whole build and potentially end up costing the client more money. Will you be using stubbies, and if so who will they be and what will they be doing? Who do they answer to if their work is incorrect or substandard? How many hammer hands vs skilled builders (not necessarily licensed builders) will be allocated to each build? Again, many franchises try to keep their costs down by using mainly hammer hands who are cheaper to employ and the end result is often very poor workmanship which is harder for the client to seek remedial work or costs for as each franchise has their own interpretation of what good workmanship is and arguing this costs thousands in legal fees if you should find yourself in this position. The LBPB and the Council will not help you should it come to defining poor workmanship so supervision and accountability are all the client has to safeguard themselves against this. I think we will all be waiting with baited breath for her reply to all our questions.

Hi John, Well said. First thing to say to everyone writing to this blog, who seems a bit inexperienced in the building game, is to press ctrl-F, and a search box will come up at the top, labelled ‘Find on page’. If you type in a word it will highlight that word throughout the blog. In this case for example putting in ‘Landmark’, contract, provisional sum, PC sum, etc will reveal many very interesting comments. I’ve written on this blog several times before to remind people that the FIRST thing they should look at (certainly before handing over money for anything) is a copy of the builder’s contract. If they are not qualified to review it themselves they should get a suitable experienced solicitor (many claim to be, but not all are), or someone like an architect, civil engineer or QS to look at it. If the contract is too biased in the builder’s favour, and he’s not willing to change it, then walk away. If his sales people etc try to tell you they never actually apply any of those biased clauses, then ask why they can’t be deleted. Of course we all go into a building project hoping that everyone will be professional, honest and reasonable. But if things go wrong (as they so often do) then all you have to rely on is the precise wording of the contract. I’ve also written about the pros (there are some), cons and proper use of PC Sums and Provisional Items/Quantities, but it seems people seldom go back and look at what’s been written before, which is really not making best use of this blog.

Hi Natty If you can pull out of the contract and if you are using a lender to build, Just as another tip. I recommend Newbuild finance. All I can say is thank god we chose them as our lender. We had to have a fixed price contract (no PC sums) if we made changes (which we did several times to upgrade fixtures and fittings etc) we had to complete a “variation agreement form” with all breakdown of costs signed by the builder and the client. This is designed to stop the predatory charging and dishonesty that comes with having only PC sums as a baseline for costs and also protects client and builder from he said she said crap. Builder also had to issue invoices to ensure we had the proper paper trails etc.We paid for the variations out of our own pockets but Newbuild had to be aware of everything. They have strict controls in place to make sure the builder does not get ahead with payments and is only released progress payments when their independent accessor carries out inspections on site to make sure the work has been completed and is satisfactory. Our build was a disaster and could have been a lot worse had we not gone with Newbuild. Some builders dont like the controls in place as it prevents them from getting away with stuff and wont sign up to them but a good honest builder wouldnt have an issue. They do take some of the pain and worry away acting as abit of a safeguard in that respect.

Hi Natty, You have asked a lot of questions, which unfortunately it is impossible to answer in detail without knowing exactly what your building contract says about Variations. But looked at in a very broad way, even if the contract is absolutely fair and reasonable to both parties in this respect (which in your case I suspect it isn’t): 1. You cannot have a truly fixed price contract if it has Prime Costs and Provisional Sums, because the whole point of these is they can vary according to the actual cost of the items supplied or the work carried out. 2. Of course if the design is changed then generally the cost will change, and if the original cost was based on just a concept design then this is usually inevitable. Which means a so called ‘fixed price’ based on a concept design is almost a contradiction in terms. 3. The fact that the overall size/footprint remains the same is not irrelevant, but it means very little, because you’ve said these were ‘upgrades’, so you would expect them to cost more. 4. So of course the overall build cost is likely to increase. Whether the builder is contractually bound to itemize the new costs or tell you how he arrived at them depends on the contract wording. (Although it may be worth getting a knowledgeable solicitor or other professional to look at whether the contract wording meets NZ law in this respect. I believe some things in a building contract are required by law, or if omitted then deemed to be included.) 5. I think you urgently need expert advice. Although I suggest you first ask yourself (or maybe someone like a Quantity Surveyor) whether the revised price is excessive considering the changes, or actually reasonable. Just because the builder didn’t tell you how he arrived at the changes doesn’t automatically mean he’s ripping you off. Although I must admit it’s a very bad omen for future relations with him, and personally I would run a mile from a builder who takes that kind of position, even if he’s contractually in the right. 6. If construction has not started, what does your contract say about whether you’re bound to continue if the contract price increases? Do you have the option of pulling out?

Hi Ludmila, The 9 months to build your house, is that from when they start to when they finish? or is it from when the contract is signed until they finish as they may not physically start on your house right away once your contract is signed does this make sense? I hope you get what I mean 🙂 I’m very much hoping you had a lawyer look at your contract, but going forward you need to keep an eye on the build and whether it’s being done properly (i.e exactly to the plans which would have been approved by your local council) because if it’s not you may not be able to get a code of compliance for it at the end so the plans are integral and they need to be followed by Eco Smart to the letter. Be as involved as your time will allow with the Council Building Inspections that will take place at certain stages in your build, ask Eco Smart when these are as they will have a rough schedule and ask to either be notified the day before it takes place so you can be there and if you can’t be there, ask them to scan and email it to you on the same day. Most companies allow for 5-6 Inspections over the course of the build. You don’t need to be a builder to read these. It states very clearly whether they have failed in an area and when they have not and if in doubt, don’t call Eco Smart for clarification call your council. if they fail in an area, this inspection report should tell you why and if or when they need to remedy it for another inspection to take place. The Council are only responsible for issues that involve the Building Consent and the Approved plans that go with it and these things are in place so your build is safe and watertight etc, poor workmanship like uneven floors or crooked weather boards or anything that looks bad is not in the councils scope to comment on and unfortunately that is all up to you to Police and please trust me when I say that it is far easier to have something fixed, altered or replaced as soon as you can possibly find it, if you get too far down the line you have to start undoing things that may be perfectly fine, just to get to the bits that aren’t and it has been known for the housing company to charge the client for undoing and redoing the things that were OK so catch anything quickly if you can. Think of it like Knitting! If you drop a stitch at the beginning but don’t find it till the end then you need to unravel it all but all the unraveling and re-knitting has a cost attached to it and building is much the same. Please go through this website and find all the very helpful info people have supplied regarding PC sums too, no doubt you will have this in your contract. As for selling it when they are done, I’m assuming there are progress payments at certain stages of the build listed in the contract? I can’t see how on earth they could sell it, even if your contract has an 8 month life span, if you hand over any money during the building process at all surely that would still make it yours at the end? Or are you worried they may increase their asking price if their build takes 9 months and you contract is only valid for 8 months and house/land prices go up in that time? I can’t tell you unfortunately, that would be what a lawyer and your contract would figure out. If you do have progress payments and they say something like “$20k paid when the roof is on” just check the building inspection reports that the roof had been done properly and they haven’t failed anything. Their version of “The roof is on” vs the councils version may differ completely. If it hasn’t passed, don’t pay. Same goes for any other progress payments, if it hasn’t been signed off by the council then it’s quite possibly not correct and nothing motivates a builder/building company to fix their mistakes quickly like not being paid!! I hope I haven’t scared you! Many of us on this blog have been through hell and back with builders, building companies, the LBP etc but that does not necessarily mean there are not good building companies out there so my last piece(s) of advice to you would be to stay alert, stay involved and never, ever feel like you are being an inconvenience to anyone if there is something you are not happy with. Write it down, ask for it to be changed and stick to your guns!! Let us all know how you get on 🙂

Hi Goo. We too had some issues with GJ’s, but they did fix a lot of our problems and at the end of the day, we are happy with our home. You may find it better to go to a private builder and Peter Quinn is one I would recommend considering, but make sure you know exactly what you want and what you will be getting. One of the most annoying sayings we heard when we were building was “This is what you will be getting.” No one was considering what we wanted. If you want brick cladding, beware. We had issues with grouting variations and there was quite a lot to be done to fix it. Moving along, consider what kind of foundation you want. GJ’s do a waffle foundation in Rolleston, which is what my engineer friend recommends in earthquake country. A lot of the local builders are putting in packed earth foundations, which he is less impressed with. They have an outer ring of concrete, earth is packed in the middle and then another pour of reinforced concrete is laid overtop. I have a link here that may be worth looking at. Page 8 refers to the performance of waffle foundations compared to reinforced concrete. I hope it is some help to you. https://cdn.ymaws.com/concretenz.org.nz/resource/resmgr/docs/conf/2012/s3_p2_-_ashby.pdf

Hi MJ, I was interested to read your reply to someone who confessed to being an older lady who has no experience, and very little knowledge, of house building. I have read many entries on this blog of other people who seem to perhaps be younger, but otherwise in a similar situation. I’m not sure how many of them realise that the common system in NZ (and I think to some extent in Australia) of buying a piece of land, and then employing a builder you have never met before, to build you a unique home (because even their ‘standard’ designs will end up as unique, due to variations in the site and your choices of fittings etc) is extremely unusual from a world point of view. And due to the nature of the building industry here, with poor control of builders and materials by Government and Councils, poor legal safeguards if builders rip people off or go bankrupt, and in fact many builders who are relatively inexperienced, and have poor project and cash flow management skills, because they don’t actually build many houses, it is extremely risky. Which is why so many people find it goes wrong. Even the nice, honest builders can get caught out with cash flow problems. In other countries normal houses are usually built by large builders, who obtain large blocks of land, then get one architect and one engineer to design and get Council approval for a variety of different size houses of similar style. So they can employ experienced project managers and large scale construction, which makes it easier to maintain quality, while keeping costs down. So I think your advice to this lady that it is probably cheaper, and certainly safer, to buy a house already built, is good. But if she ignores your good advice, and goes ahead with getting a draughts-person (I’m being PC) to prepare some plans, I’d like to ask what you got for $5K? I assume that was just for some basic concept drawings, perhaps with just layout plans and elevations. Because in my experience people should budget for something closer to 10% of the construction cost, more like $50K, to get full construction drawings that can be submitted to Council, including all the engineering design and detail drawings, and Council fees etc. Plus of course other paperwork and inspections required during and at the end of construction, to get code compliance.

Hi Chris, To avoid confusion I’ll mention I’m also called Chris. I’ve written on this blog a number of times previously, mainly on the topic of building contracts (make sure the contract is satisfactory/fair before giving a builder any money), and PC sums/Provisional Items (fine if they are used for the purposes for which they are intended, and you are satisfied the amounts are reasonable). I think this topic of copyright and ‘ownership’ of builders’ ‘standard plans’ comes into a similar category as builders’ ‘standard contracts’. By which I mean it’s up to the client to think about the legal aspects of this, and sort these out with the builder, before paying the builder (or his architect/designer) any money, or letting them do any work. As a rule architects/designers will just automatically stick some kind of wording that says they own the copyright of their drawings/designs on everything they produce. If you let them do that you’re stuck with the result, that you can only use those drawings/designs with their permission, as they do not belong to you. They might claim this is fair, because as it was all being done through the builder (who is their regular client) so they did the work at a subsidised cost. Which may sometimes be true. So I suggest that if you believe you are going to pay the full unsubsidised cost of your bespoke drawings (which are not just minor amendments to the builder’s standard drawings), then you say up-front that you expect the copyright to belong to you. Or if you want to compromise you can get them to agree that you will all share the copyright. So they can give the design to other clients if any of them really love your design, but you are free to take the design to other builders if you can’t reach an agreement with the original one. A lot of people seem to have missed the point that before you give them any money, or sign anything, everything is up for negotiation. If they’re not willing to talk about this kind of thing in a reasonable way then find another builder.

The head franchisor in this business charges franchisees like a wounded bull. I have associates in the industry who have left one of these businesses due to unethical charging practices they could not condone. PC sums are a way to con people into accepting a price leaving it open for the group home builder to charge anything they want to a degree. PC sums should be clarified in the contract. Any variations to the build must be accepted as per contract by the customer or else it cannot be charged for. I know of one Auckland housing company doing this as a norm to incur major extras for their customers. Unfortunately for them their name has become mud and I would not hesitate in suggesting they may not be around in the future. Just tars our industry with bad taste again and you know it’s just that the construction industry has allowed a large number of insincere and unworthy individuals to enter into it and apply fraudulent practices believing they can do what they like to people. Network people and tell all of their behaviour. It will come around to bite them in the butt but it will also make the head franchisor step up and take note. Most head franchisors don’t give two hoots of these practices. In fact they condone them.

Hi Brenda, I’ve written on the subject of Prime Cost (PC) and Provisional Sums/Quantities before, so I’ll try to keep this brief. There is nothing wrong or dishonest in principle about the use of PC sums, if they’re used in the correct sense. In fact in theory they should be to the benefit of the client, because they should be used for things like kitchens, carpets, electrical appliances etc. So a sum is allowed for a ‘reasonable’ or average standard or quality, but the client can choose to pay more (or less) for something of a higher or lower standard or quality. So you have flexibility, rather than being forced to take only the one chosen by the builder. But of course this means you must do your homework, and find out before signing the Contract what you’re going to get for the amount allowed. The point is, it should be the client who gets to choose whether to pay more. Where these can be used to take advantage of naive clients is if the client lets the builder put in a PC sum for example for something like electrical work, and the client takes the builder’s word that this is adequate. Then later the client realises it’s only enough for say one light and one power outlet in each room. Enough in theory, but of course not what the client was expecting! But I think you may be referring to Provisional Sums (often mistakenly referred to by people in the building trade as PC sums, because they’re builders, not experts in contract law). These should only be used for things like earthworks and foundations, where the quantity (and therefore cost) cannot be exactly predicted until the work starts, and the engineer/Council have assessed the situation. Of course if you sign the final contract before the detailed design has been finalised, and Building Consent obtained etc, then the number of things that genuinely fall into the category of unknown, and therefore difficult to accurately cost, may be much higher. At the end of the day, the more accurately and completely the soil conditions are investigated (a truism in construction, money spent on site investigation is never wasted), and the building designed, and the more questions the client asks, the more likely you are to complete within your expected budget. Having said all that, even major government projects, designed and supervised by professional engineers, (with specifications and drawings 50mm thick) often have a 10% contingency allowance for unforeseen costs. So in my opinion any client who starts a build without having at least 110% of the contract price available is taking a great risk.

A provisional sum is an allowance (or best guess), usually estimated by a cost consultant, that is inserted into a documents for a specific element of the works that is not yet defined in enough detail for an accurate price. It is a tactic some Franchises use to seem more cost effective. Good luck in your pursuit of claim, however it may prove difficult to get a decision in your favour.

I had the same experience with Signature Auckland North Shore. Tactic became very obvious once the contract was signed. They include a large number of PC sum items which they over ran significantly on almost all items. It has been stated many times on this forum – you need to challenge hard to minimize PC Sum items. They are very good at convincing the inexperienced first home builder that they are an essential part of the contract but in my view they are way over used to their advantage in locking you in to a attractively priced contract. Then before you know it the project cost has blown out significantly and by that stage you are in to deep to do anything about it.

Hi, Sorry to not answer your question directly, but I do want to warn you to get PC Sums OUT of your contract. Everywhere! Our pc sums resulted in overages of anywhere from 60% to 164%!!!!! Our house cost $58,000+ MORE than we were quoted, and we changed NOTHING from the original plan. 58K is a huge overage on a 450K budget! So, my only help is in advising you to stay away from Signature Homes, and also to get PC Sums OUT of the contract. Honest contractors need very few of them. We had 2 PAGES of them!!!

Absolutely on same page as Brie. We had a customer who got a price from GJ’s and they came to us for a quote. We told them we would be $30K cheaper easily. They said when I put the quote to them that we were the same price as GJ’s. So I happily asked them to go back and ask specific questions and get it in writing about site excavation, fill, blockwork etc and yip, they had a pc sum of $1500 in the contract, no fill, no blockwork and yup, we were around $30K under the GJ price. Don’t be fooled people. Do your due diligence and tie up the contract for fixed price. Everyone out there is presenting contracts on pc sum which is a joke. It is unethical and works in favour of the company charging you huge variations. When you have to add something they charge like wounded bulls and you signed the contract allowing them to do this. Also make sure when you go to an architect you advise him what your build budget is and be realistic. We had a couple come to us wanting a beautiful house built out of Hinuera Stone and the cost from 2 other builders was around 850K to 1m and we came in at $760K. Their budget was $600K. They had to sell the land and move on destroying their dreams. We get this all the time, people wanting to build something designed by an architect and then expecting us to build for a ridulously low price. Its not fair on the customer and its not fair on the builder. We also do a huge amount of renovation work and find all the time that designers have designed something ridiculously costly for the application and coming to a reputable builder first and foremost, we can put you onto our contacts and work with them to design exactly what you need (ie: saving cost on the build). People think process is design, costing, choosing builder then build. Its not, its builder/designer working together, coming up with the right price for the build, tailoring specification to suit, making sure the wish list is accommodated for and then building with happy parties from go to whoa. Otherwise be careful what you wish for.

Have you come across green homes? Ask for Hamish, he was really great to deal with and got most of the PC sums removed and actual costs put in before the fixed price offer.

Hi Brie, All good advice. In connection with builders putting in ‘standard’ provisions (or alternatively PC or Provisional Sums) which are unlikely to give you what you want in the finished build, please see my post yesterday on PC and Prov. Sums. But regarding my other comment, about how many people in NZ seem to get involved in building a house, when they have limited or no experience of building or building contracts, I have to ask, ‘Who on earth would employ a builder to design and build a house on their land, without first checking themselves to see whether there are any covenants, and making sure the builder is aware of them and has complied with them in the design, or priced to comply with them during construction?’.

Hi Shas, This is a complicated subject (which I’ve written about on this blog before). I’m not sure that Janine & Martin are entirely right in saying there is no limit in the amount a PC Sum can vary, if by that they mean it’s outside your control. I agree you should try to keep them to a minimum, but as I mention below it’s not PC Sums that are really the problem. It’s Provisional Sums that cause most problems. But if the work under these items is required anyway to complete the job, then unless you got a really watertight fixed price contract (which is very rare) you’re going to pay for it anyway. You’re best bet is to anticipate the problems, and try to minimise the builders room for padding costs, by putting in realistic sums, or getting rates for the work upfront. First make sure you are using the right terminology. In NZ Prime Cost (PC) sums generally cover the cost of items you know you will want, but the specific items may not yet have been chosen. In this case it is important that the contract makes it clear that it is you, the client who does the choosing. So if, for example, the contract allows $2K for supply of an oven, or $50/sq m for carpet, and you choose a more expensive oven, or more expensive carpet, then you must pay the difference. But if you choose less expensive items you should be credited with the difference. It’s up to you to make sure PC sums are realistic for what you want. Ask the builder before signing the contract which supplier he uses for these things, and check out how much they charge for what you want. Some contracts allow you to supply your own stuff, but that can cause complications with warranties. A Provisional Sum (or Quantity) is an amount that has been included for work where the requirement for, or extent of the work, is not known and can’t be determined prior to signing the contract. Obviously this means that the final quantity of the work, if any, is usually completely outside the control of the client, and in many cases outside the control of the builder. It may be determined by the engineer or by Council requirements etc. Typically this would for things in the foundations, like excavation of unsuitable material, or depth of piles, which can only be known exactly after work starts. In theory I suppose you can say this is unlimited, and certainly most builders will try to underplay it when they give an initial price. But in reality an experienced builder is expected to be able to make a reasonable estimate prior to starting work, especially if you’ve had a detailed site survey and some simple site investigation done before talking to the builder. And of course you can always ask an independent quantity surveyor or engineer to estimate a reasonable figure before you sign the contract. If it came to a dispute I think a court or arbitrator would tend to side with the client, as the less experienced party, who did not write the contract. My suggestion would be to try to put in the contract at least some Provisional Quantity of these things, so you can get a price per cubic/square/linear metre. Then if the quantity changes it can be measured, and paid for at the agreed rate. It’s not just a sum the builder has dreamed up! I’m continually surprised that so many people in NZ go into house building with almost no knowledge of building contracts, and without taking independent advice.

Yes, agree with Sarah. We had a very similar expense on our first build in Wellington for soft ground. In the scheme of things, especially given there were changes to positioning, this is small. You should always have 4-5% contingency set aside (preferably that the builder doesn’t know about) even with a fixed price contract for these types of things plus for the inevitable upgrades, curtains, landscaping etc. But all changes and variations should be formalised and signed by both parties, or at least agreed to before they commence via email.

Should the builder of contacted the homeowner with a written variation stating what needs to be done before work commences. I also thought both parties were to sign the variation?

Hey Jurgen – yes they can do that as in your contract it will state (as David mentions) about unknown conditions and there are clauses that allow the builder to charge you extra. However they have to be reasonable and when it comes to earthworks $1,000 is fairly reasonable. In my case they charged me $16K extra at the end of the job, despite my questioning them at the time and saying I could not afford to go ahead with build if it cost more (should note that the geotech report said the ground was “all good” – it was in waimak which is solid ground). They told me it would cost me $500 more then essentially spent an extra $15,500 of my money without even asking me (no variation signed). Ended up in Court as I had to pay them because they locked me out of my house until I did!!! Then took them to Disputes Tribunal. Unfortunately the DT “adjudicator” knew diddly squat about building and as they always do awarded half. Was extremely angry and pretty much still am. Because of Court case they also never came to do any of the maintenance issues I brought up with them – but just couldn’t be bothered to fight them anymore….. 🙁

Hi Donna I didnt relise you were in Christchurch Dont get fooled by our website, we do all levels of pricing and against the housing companies we are much more competitive as we dont have any overheads and why we are doing so well. I would love the opoortunity to work with you on your project. We offer a fixed price contract where others dont so once you sign the master build contracts, there are no suprises through construction which you will get with others. Our quality and finish is outstanding and you will see from our feedback. We also take control of our quality as we will only use one team of subtrades so there are no variations in our quality Cheers Peter

Hi Concerned, I assume you’re responding to my post to Pollu on 2/5/18. You raise some good points and questions. And I’m as puzzled as you as to why your builder (or any other) would want to risk their reputation, and getting future work, by doing sub standard work. Presumably because there’s enough business around, and people who don’t know about them, that they can get away with that kind of performance. If not, never mind, it seems that in the building environment here they can just get away with closing down, and re-opening under another name. But to get back to the original point about a builder’s responsibility for the work of sub-contractors. Of course if you, the builder and his subbies are all reasonable people, with enough trust on all sides, and a subbie has just made a few honest mistakes, it may do no harm for the client to talk directly to the subbie. I would still immediately follow up in writing to the builder confirming exactly what was discussed and agreed with the subbie. However, as I’ve said before on this blog, once a Contract starts to go badly wrong, and if the builder is dishonest or useless, it never ends well. But still it may help to get some remedial action or compensation if you have a well written Contract, and follow the right steps. So in the case you mention if I were you I would: 1. Check to make sure your Contract has a clause making it clear that the builder is entirely responsible for the work of sub-contractors, as though it were his own work. 2. If that’s correct, then write to the builder quoting this clause, and requesting that he send a representative to all meetings with sub-contractors to discuss defective work. 3. If he refuses, or does not answer, then write again saying that if he fails to send anyone then you will take this as his authority for you to point out to the sub-contractor what remedial work you consider is required. But make it clear to the sub-contractor he should get his instructions to carry out the work from the builder, and he should talk to the builder about any cost involved. 4. Write again requesting the builder to instruct the sub-contractor to carry out the work, and confirm that he will be responsible for the cost of any such work. The danger you’re trying to avoid is that the builder suggests that you have instructed the sub-contractor to carry out an unnecessary change to the work (ie a Variation), rather than remedial work, and so you should be responsible for the extra cost. Of course, all of this tends to go more smoothly if you still have enough retention money to cover the cost of the remedial work, if the builder doesn’t do it! Good luck.

Hey Sanjay, that are at the higher end of build companies but for the experience of building 4 homes you get what you pay for. This is the only build company I have worked with that has stuck to the contract price. The only variations we have had, have been due to changes we have made during the build (example was changing a window to a door and an upgrade to kitchen worktops).

Hi Hadenough Ask an honest experience brick layer. It won’t change over time. We have variations of mortor colour on East and South walls. It has not changed to match the rest. They did laying at different times and also patch jobs. These didn’t change in colour nor match. They also did another large patch job at a different time and yet that area matches the rest! Figure that one out…

I understand what Peter is getting at here, and of course ideally every cost would be completely fixed (with absolutely no provision for increases due to inflation or changes in the builder’s costs) before you sign the Contract. And then the client would not make a single change (Variation) during the Contract. So the final cost would be exactly the same as the original cost in the Contract. In your dreams! With bespoke houses that would be difficult, if not impossible, to achieve. I would happy to hear of examples. But my main reason for writing is to say that as a builder Peter should not get confused between PC (Prime Cost) sums, and Provisional Sums (or could be Provisional Rates or Quantities). As I’ve said before, the former is a sum put in for things like kitchen appliances, carpets, tiles etc which allow a sum of money for the client to choose the type they want, when the item is required. So they just pay the difference (or get a rebate) if the cost of the item is more, or less, than the PC Sum. Nothing wrong with this, as long as the client is realistic about what they can get for that sum. A Provisional item is different. It is for an amount of money, or a quantity or rate, put in for something which neither the builder nor client can accurately assess at the time the Contract is signed. A typical example of this is in foundation work. The Contract may be based on the assumption that the soil on the site is all of a reasonable standard, which allows a standard type of foundation. But any builder or client with any sense will put in a Provisional Sum (or better still a Provisional Quantity with a fixed rate ($/m3) for excavating and disposing of ‘unsuitable material’, which only comes to light when excavation starts, and replacing it with crushed stone or some other suitable material. Typically that might be 10% of the anticipated excavation. Of course if you get unlucky and it’s a lot more then the build cost goes up. If it’s less the build cost goes down. The main point is that the decision on this should be made by the Engineer. So it’s out of the hands of both builder and client.

Hi Vishal, I’m not sure whether the number of PC sums is the only basis on which you’re choosing a builder. I would hope not. Especially if you think that zero PC sums means it’s in effect a fixed price Contract. Because that would depend on other clauses in the Contract, and it’s very difficult to find a building Contract which is absolutely fixed price. But regarding whether these PC sums are a good thing, that depends on what the builder is actually including in his spec. To give you a simple example, if the PC sum is for kitchen appliances, it may be better to have a generous PC Sum in the contract that you know will buy you top of the range appliances, rather than no PC Sum, but the builder has only allowed in his spec for low grade appliances. That’s OK if you don’t mind low grade stuff, but if you later want to upgrade it then it becomes a Variation to the Contract. And that may attract other costs, apart from just the difference in price of the appliance. The answer is that you must do your homework, and check exactly what the Contract includes in the overall price, and exactly what it would cost to get what you want. So you can surely look at the PC Sums in Today Homes contract, and ask yourself whether they are enough to get what you want. Typically these are things like kitchen cabinets and appliances, tiles, carpet, bathroom fixtures etc. You should then know whether you’re going to have to pay extra. By the way, do not confuse PC (Prime Cost) Sums (which are generally for things you know you will need, but may want to choose an exact type or model later), and Provisional Sums, Rates or Quantities for things that the builder may genuinely find it difficult to assess out until he gets on Site, or which you may never in fact need. For example amounts of excavation required for the foundations, which may vary depending on the soil quality.

Hi Ashley, I totally agree with Sarah’s comments. But I would add that you should also push the builder to keep the number of PC items to a minimum. For example in the case of the service connections mentioned, a PC sum in a general spec you see when you first visit the builder is not unreasonable. But should not be necessary once they know the actual site details. At that stage they should include the actual price in the final contract that you sign. If they don’t want to do that they are being lazy, and hoping you’ll cover them for their mistakes. The actual meaning of PC is Prime Cost, and is intended for use only for things that you the client have some choice about. For example kitchen fittings and appliances, or tiles and carpets. Not for essential engineering parts of the house that don’t involve any choice on your part. There are also what are called Provisional Sums, Rates or Quantities for things like the amount of excavation in the foundations. You may have no control over these, but also the builder may be unable to calculate the exact amount until the engineer sees what the soil condition is like. I suggest that if possible you always go for fixed rates on provisional quantities, rather than just a provisional sum of money.

Hi I have build with stonewood and i have same experience. What an absolute nightmare. Horrific customer service, no communication, no empathy, some shocking building errors and heavy unexplainable variations costing thousands. Stay away from stonewwod homes in tauranga. Do not touch them with a barge pole. Before signing the contract they will chase you and after signing the contract you have to chase them. Total cowboys. I wonder how this people can survive in the industry!!!!.

Be EXTREMELY careful with Golden Home. Make sure you get in writing that they will advise you of EVERY SINGLE variation and the EXACT cost of each. I had to take them to court because they added another $16K to my cost without even telling me. Make sure you look through all the comments on here about Golden Homes Christchurch (Peak Construction) before making your decision. I can recommend some really good and honest builders in Chch if you are interested (ones I have used, not that I am “involved” with or anything!). 🙂

These are steel framed homes only. Once the build is complete to renovate or alter is a nightmare as u can’t cut frames easily and is very costly. Steel frames are noisy and crack loudly so see if you can contact some existing steel framed home owners first. Don’t be sold by the timber doesnt last or is inferior technique as Golden only offer steel and not timber. This means to install the roof is extra cost due to steel fixings required. Also they normally bring their pricing down by offering large garage space that do not require same as internal finishing. Ensure any contract you sign has the correct number of electrical fixings per room that would be required in a normal house build as group house builders short change on these and they are expensive variations to have to pay for. Just another ploy they use to reduce price upfont and then charge like wounded bulls for. Golden have a good name on the Shore and they have been in business a long time and are secure. Another franchised company that you are paying franchised fees to a head office and that’s why they are more expensive. If you want to spend time building the right way, get a known builder who has excellent references who project manages the build themselves and is controlling quality and the timeliness of the build. Best question to ask is how big is their team and how do they conduct a house build. Do they complete one project prior to the next? If they are small don’t use them. If they are committed to finishing multiple projects don’t use them.

We are building with stone wood in the same area. What an absolute nightmare. Horrific customer service, no communication, no empathy, some shocking building errors and heavy unexplainable variations costing thousands Do not touch them with a barge pole

Hi Geetha, I’m not a lawyer, but I spent my whole career writing and overseeing construction contracts. So I can tell you first that you could write a book (and people have) on dealing with delays in building contracts. So if you can’t afford a lawyer who knows about building contracts (not all do), try looking in the nearest library. But to keep it brief: I assume you are already part way into the build, so I assume you must have some kind of contract. The first thing obviously is to read what that says about finish date and delays in plain English. My understanding is that if the contract is over $30K, and was signed after Jan 2015, then by law it must give an expected completion date, and how to deal with any delays. Ideally that method would state an amount the builder has to pay you in Liquidated Damages (ie a fair assessment of your actual loss, not a penalty) for each day of delay. After allowing for all reasonable time extensions, due to things like bad weather, and other stuff outside the builders control, or extra time for variations you have requested. This of course is where arguments can arise. In my view the builder just being busy on other jobs is not a valid reason, but if he can’t get subbies in because they’re too busy, or he’s inefficient and doesn’t order materials on time, so they come late, you tell me. But at the end of the day those kinds of delays don’t justify taking 18 months on a 9 month job. If you have none of the above, then look for words like working ‘with due diligence’. Then start keeping accurate records (with photos) of when the weather is fine but he’s not working. That may not get you any monetary damages, but might at least help if you want to take legal action and terminate the contract.

The implied terms in the act cover this under building consents clause 1.3. 1.3 If any approval or consent is issued subject to any conditions that will require a variation to the building work, the building contractor must advise the client, by notice, no later than 10 working days after the date the consent is issued, of— (a) the building work that will be required to achieve the variation; and (b) the effect (ie, the increase or decrease), if any, on the quoted or estimated price for the building work; and (c) the effect, if any, on the due date or the estimated due date for completion of the building work. 1.4 If the terms of the variation are not agreed within 10 working days of notice being given under clause 1.3, either party may, by notice, cancel the contract. 1.5 Notices under this clause must be in writing, despite anything to the contrary in the contract. Plainly put you the builder must notify you in the proper manner if you are to have any additional cost as it varies the contract terms. Its very clear what the procedure is ,if they don’t abide by it then you would be justified in not paying for it as the “professional” you are using should have been aware of it at the least and in turn should have made you aware of it,passing the buck onto you won’t work. It would probably fair to say you would not have signed the contract if you had known this could happen. Please check your contract to see if there is a dispute procedure in it. Sounds like he is taking advantage of you. I wouldn’t worry about the tribunal process as they are used to these sorts of things in a very simple and factual way,heresay is not a good defence ,so long as you have anything in writing to support yourself.Its a very inexpensive way to deal with these sorts of problems. Hope it works out for you.

Thank you so much for this Sam. Does this apply to changes which are classed as “extra work”? Builder told me and the courts that a variation is a change that a home owner wants changed which needs to be in writing. But work classed as “extra work required for building consent” does not need to be in writing. Thanks heaps again!!

Hi Sam & Charles, I’m not a lawyer, but I’ve spent many years managing construction projects, so I know from bitter experience that contractors (ie builders) often see different interpretations in contracts, although the meaning may look obvious to you. So regarding this one, firstly it seems to me it relates only to variations which arise from Council approval or consent in order to get the building consent. It says nothing about other variations. Secondly, although it says the contractor must state the effect on the price, it does not say he has to justify that with any specific documentation (eg invoices or quotes). It just says you have the right to cancel the contract if you don’t like the figure. Of course in this case you may have a bit of leverage, since it seems the contractor has gone outside the terms of these requirements, by proceeding before the variation was agreed. Hopefully that was pointed out in writing, the moment you could reasonably have become aware of it. Because if you knew, but failed to notify him, he could perhaps assume you did not disagree. Lastly, I think these new regs may have only started in early 2015, so perhaps your contract would need to have been signed after that.

Hi Mark, We didn’t even authorise the variation. The builder just did it as he said he needed to lower floor level on build as the driveway would have been too steep. We did not discuss any price, nor did he tell us it would cost more. We have no idea what we have paid for as the progression payments he asked for were all very large (around the 80k mark), with no detail on them other than progression payment. He billed us for this 18k. At the end of the build we had a number of issues and disputed a bill as we felt we had paid too much already. There are jobs not finished also. The builder has now changed the price on this variation (and the name of it to “extra work required for building consent”). The price is now 15% more than previous as we made a complaint about some of his work. He says he is allowed to do this as per the contract. We are at a total loss about this and a raft of other issues. Do extra work have to written? Or can just be verbal as that is what he is saying happened (which is didn’t)

Hi Steve, Sorry to pursue this, but the latest version of the Registered Master Builder’s contract I can find is 2015. And if the one you’re referring to is RMB then your 2016 version must be very different to the 2015 version. But anyway, based on the Cost Fluctuations clause (Clause 64) of the 2015 version my personal view on whether an increase of $2K on an original figure of $9K for electrical work could depend on a several things: -Was the $9K an actual quote based on a detailed scheme layout, or just a provisional sum, with the intention that the scheme details be decided later? -If the latter, did you ask for things that pushed the price up? -If the former, how far in advance of actually doing the work were the scheme and quote prepared? Although the construction only took 3 months, maybe the quote was a lot earlier. I think most of these quotes are only valid for about 30 days. -These days I think $9K would only get a very basic electrical system for a fairly small house. So if you finally got something satisfactory for $11K maybe that’s not too bad.

Still waiting on ours to be finished, would not recommend this company not organised and seem to have issue with every trade. Slab, issue, frames, issue, painter, issue brickie, issue roofer still issue. Build quality is ok if you keep your eye on them. It will likely be 52 weeks from start of build this was with us coming with a complete set of plans and council consent. The General manager Stuart doesn’t care as long as your signature is on the contract. also be careful they don’t sell you a package from investor homes and then up sell you on all the variations, This is is another company run by Stuart. They are over committed and under resourced. I hope this reaches you before you sign, stay AWAY.

Hi ‘A Builder’, Sorry to have upset you, mate. I’m sure you’re very good at building work, but perhaps not so good at reading what people have written. You’ll note I put ‘or excuse’ in a bracket, because I totally agree with you that most variations will be a legitimate reason for an increase in price and a time extension. I’m a civil engineer, and I’ve spent my whole career supervising major projects, so I understand very well how building contracts work. But at the same time it’s very easy to think of variations which save the builder both time and money. The honest ones will admit that. The less honest ones will still try to pull the wool over their client’s eyes, and think of a reason to charge more. If you take time to study the entries on this blog, you will read of many cases where it appears some builders (but not you I’m sure) are taking advantage of clients inexperienced in building work. And even cases where clients don’t change anything, but still find themselves being asked to pay more, or the project running over time. From his original question I assumed that ‘Che’ has very little experience of building contracts, so I was trying to respond to his request for advice.

Chris, charging for a legitimate variation and taking longer to complete the project is not an “excuse”! If you make a change to a design then the builder should (common sense and good business practice) reasonably charge and increase the construction duration. People need to understand that shit ain’t free and if you don’t change anything it shouldn’t cost amy more or take any longer. Your comment is like a mechanic doing an oil change and then you asking the mechanic to replace the gearbox for free.

Hi there …the price per sqm thing really does not come into it…. Get your own plans drawn up then present them to the different companies for a costing…remember to find out how much they have allowed for kitchen, carpet and tiles etc…some lower price per sqm companies can also mean low budget kitchen etc…by having your own plans you do not got locked into the deposit with the company…if you get them to draw your plans and then price it and you don’t like the price ….you have to walk away without your deposit and without the plans that you have spent many hours on. You need to know what their PC sums are and ask to see the quotes from which they come up with these figures….PC sum blow outs at the end can cause you a lot of stress when you have budgeted for one amount and then owe them 50K more ….tell them you want all of your decisions that are made after you meet with color consultant electrical and kitchen not to include their 180.00 odd variation fee….ask for their best site supervisor and building team…the wrong supervisor can set you back weeks with late deliveries and unorganized subbies…Remember your building company has screwed down the price rate to the subsidies so they will go in and do just the bare minimum to get the job done…any errors that come up the housing company will be looking who to on charge the extra cost to…if that is not a subbie then it could be you… check everything out…get kitchen and electrical quotes first before signing contract with them…get your contract looked at by a lawyer they are usually geared totally to the building company. Anyway I could go on and on..

Thanks for the tips! I shall avoid GJ and Signature. Have you tried Universal? I have 2 friends who used them at Long Bay and Huapai. It seems like their experiences were good. I would like to buy their house and land packages but they are out of our budget. Also, the friend in Long Bay said that what universal quoted is what they paid for without variations or other hidden charges. Her only complaint was the after sales service took longer than she expected.

Thanks I wonder if there is anyway that I can check that they only have taken the builders margin of 20% on the rest of the variations. But I really need to know how to put a hold on the CCC so they can’t get paid till I’m happy. I’ll ring the council tomorrow.

Hi there. Stick to it. It is very common these companies (weve built with Stonewood) to do this. The variation MUST be substantiated and justified. Do NOT pay for any variation that is NOT at your direction. It shows that they have made a mistake in pricing and is their risk, not yours. You are legally entitled to hold back money if you need to. Don’t be bullied. You have backing in the form of the Building Act. We had a very protracted process and are still awaiting CCC some 3 months later. We have held our final payment until we get the piece of paper in our hands. All variations they tried to submit we asked for detailed breakdowns .

Hi Graeme, I’d be interested to know where you got that figure of 10%, because based on the meaning of PC (Prime Cost) Sum I do not see how it can be correct. It is usually taken to mean an allowance for materials to be supplied by the contractor, but on which the principal (owner) has yet to make a final decision. The actual price is to be substituted for the allowance in due course. So for example, they might put in a PC Sum of $1K for an oven, but if you decide you want an oven that costs $2K, then you have to pay the $2K. So the onus is on you to look at the PC Sums before you sign the contract, to make sure they accurately reflect what you might later choose. Do not confuse PC Sum with Provisional Items, Sums or Quantities. These are for things like earthworks, foundations and drainage, where only estimates of quantities or sizes etc can be made during design, as the final figures might depend on things like soil conditions, or in some cases what the Council might require in the final design. In this type of case you’re much more in the contractor’s or engineer’s hands to make realistic estimates of what might come up. But of course in general the builder will tend to want to err on the low side, because if he’s too conservative it may actually put you off giving him the job. So most engineering/building contracts would include a contingency sum (allowance for the ‘unexpected’, and that’s not you choosing a more expensive oven!) of at least 10% of the total contract price.

Major under estimating of a PC sum is a major problem for the Company and a small one for you. If the item is listed as PC Sum in the schedule then the final cost must mot exceed that amount by more than 10%. Contract law.

Hi Marie, I did build on a lifestyle block with Golden Homes Rodney in about 2001, but I suspect it was a different owner/building company then. If it was in Chch I’d say don’t touch them with a bargepole but Rodney might be different (it was more about the people than the actual build you see). Some observations about Golden Homes though that you may want to take note of. When building on a lifestyle block you will find their PC sums in relation to electricity connections woefully inadequate. I have found all building companies only seem to include pC sums that would be for connections on a suburban section. We built in Kumeu and ended up paying about $3000 extra for the extra trenching and cable laying it required from the electrical point. The other thing with Golden Homes is that their “building guarantee” is not an independent one like Master Builders. It is provided by a company owned by the people who own the head franchise and doesn’t cover for a lot of the things a Master Builders would cover (e.g. bad workmanship/materials and loss of some moneys) it only really covers structure. On the good side I would thoroughly recommend the building with the Zog steel. The small house I had built with them has had none of the usual popping of nails, cracking of paint etc etc that you get with wooden frame. Just make sure you keep an eye on any build as it takes place as mistakes are pretty much always made and its good to nip it in the bud early. Hope some of these comments help – but hopefully someone else has built more recently with Rodney GH and can give more of an insight. 🙂

I agree whole heartedly. They are rubbish. The CEO is full of it, talks the talk, but dosent walk the walk. They will take for ever to do anything, promise you the world – and deliver nothing short of pathetic. The CEO is driven by greed, with no thought to the multitude of staff he has gone through and he definately does not regard his clients as his business. Dont even walk in the door of Canterbury, Southland, Wellington, Manawhatu or Wairarapa, which are all owned by the same person and based on the Kapiti Coast. All the licenses are run remotely from there so the support is nothing, they virtually have no competent sales persons left or supervisors to manager your project. You will always be asked ahead of contract to pay each progress payment – but I hope you have time to wait if you are asking for a credit or variation request, absolutley no rush in this department. If you dont believe the numerous blog sites and very poor reviews this man/company has reveived – ask for some references from them, they won’t be able to give you any positive feedback from past clients. Good luck with any building project that anyone is undertaking – just walk right past Platinum Homes and this man.

My friends are building with Signature Homes in Rodney and they’ve had a whole heap of problems – majorly under estimating the PC sums and ending up with a massive bill – they screwed up 3 key feature points in the house and the big boss doesn’t care or want to try and find a solution

Hi Charlie. A few years back I used an independent builder – John O’Connor for an extensive and exhaustive renovation of my house. I found him knowledgable, reliable and rather economical. His work is to a very good standard and I have found him quite ready to come back and do minor repairs free of charge even if at the end they were found not to be due to the renovation. But be careful with the original contract as any change (including minor ones) becomes a Variation with the all the cost involved. Try to get everything in the contract and quote up front. Selim