There are a number of ‘risks’ associated with running a building project – weather delays, price increases, mistakes and omissions, quality control, unavailability of materials, sub-contractors not turning up on time, etc. – that will end up out of some ones pocket.

The type of building contract determines whose it might be. In the first instance, a Fixed Price can seem high, however, take into your account all the things that can possibly go wrong during the building process, and access whether this is something you might like to pay for in a Charge Up contract.

There are Pro’s and Con’s to both contracts. Regardless of the contract you decide to go with, document it all on paper, have it dated and have both parties sign it. This is a basic piece of information that is often forgotten, but can be prevalent if anything happens to go wrong. Store this in a safe place, and if possible, give a copy to your lawyer for safekeeping.

A Fixed Contract price means that the builder will take care of the entire project, and therefore assumes all the risk. He will expect to be paid a premium for that service, and if you have neither the time, experience or stomach for running a building project, it will probably be well worth it. Generally, you will need to spend a lot of time finalising details before construction starts, so that the contract accurately reflects what is to be built.

Builds where Fixed Pricing can work well are:

• Construction is to be a straight forward home that will be built off plans from a Building Company, or you have had a Quantity Surveyor calculate similar costs prior.
• You do not have the time, or want to manage the entire build yourself; it can be a full time job.
• You have financial constraints and need to know exactly what budget your home will be built upon.

A Charge Up Contract can work well on various types of construction jobs. However you can be liable for many of the hidden costs that appear throughout a build, often resulting in a budget blowout. Charge-up removes all the pricing risk from the builder so he can just get on with what he is good at – building stuff. The down side for the client with charge up is that there is no price certainty, however, if you have a good relationship with a collaborative builder, charge-up could be a suitably civilised arrangement.

Builds where charge up can work well are:

• Construction that is too difficult to price accurately.
• You trust the builder and/or will be on site a lot of the time to check and advise.
• You want to retain flexibility, and have the ability to change/alter decisions as they appear.