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I was hoping to have some building work done in England and got two quotes: I would have liked three or four, but it was quite enough work to get two. To my surprise, they different hugely: one was literally twice the price of the other.

Combing through them, it looked as though the higher one included items that the lower one didn't: skip hire, for example, and a substantial project management fee. This made me suspicious that although both are from reputable builders, the lower one might be incomplete and the builder might well find there are additional costs to bear during the work.

Now, I can afford the lower quote with a bit to spare, but I absolutely cannot afford the higher one. So I'm concerned that if I go with the lower quote, half the work will get done and the budget will run out. This, in turn, made me wonder about what legal recourse I might have in that eventuality.

The Citizens Advice Bureau site has this to say on the subject:

The contractor can’t charge you more than the price on their quote unless:

-you ask for extra work that’s not included in the quote.
-they let you know they have to do extra work and you agree to pay more for it.
-they made a genuine mistake when writing down or calculating the price - they have the legal right to charge you what it should have been.

The first point of which seems entirely reasonable, but as far as I can see, points two and three can essentially be invoked to cover the builder for any mistakes they made in the quote. Forgetting to add skip hire or project management, for example, could both count as "extra work" on point two or a "genuine mistake" on point three.

So, realistically, how much protection under the law do I have if I accept the cheaper quote and the builder finds their costs soar during construction because they left stuff out of the quote?

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  • Show the lower-priced contractor the higher-priced quote and ask if that reminds them of anything they might have forgotten, and if they say 'No", preferably in writing, you can hold them to that.
    – Monty Wild
    Sep 21, 2023 at 13:45
  • @MontyWild I thought of that, but my concern is that it gives them a rock-solid excuse to add stuff to the quote that they'd "forgotten".
    – Bob Tway
    Sep 21, 2023 at 14:40
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    Maybe if you just ask them by email if they've forgotten anything like skip hire or project management fees, because you can't afford to pay them more if it turns out they have forgotten anything, they'll have to decide if they want the job or not at that price. Nice Dragon Pass Crimson Bat counter, BTW
    – Monty Wild
    Sep 21, 2023 at 14:57
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    “Skip hire” and “project management” are overhead costs, not work products that can be inspected for completion at the end. Clearly define the scope of work and end results in objective, quantifiable language, then write a contract with terms you both agree to. You protect yourself by documenting expectations. Sep 21, 2023 at 14:57
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    @BobTway I played a lot of RuneQuest TTRPG, and a friend has pretty much everything RQ including DP.
    – Monty Wild
    Sep 21, 2023 at 15:26

1 Answer 1

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You define the scope

That is, what the builder will do, and what the builder won’t do. This is no different from any other contract.

If the scope does not vary over the course of the contract, then the price will not vary.

However, …

Defining the scope is an exercise is risk allocation - you will take the risk on this thing, I will take the risk on that thing. The more risk you put on the builder, the higher the price you will have to pay - people need to be compensated for taking risk. Think of an insurance contract - the insurer does nothing but take risks.

Some contracts are low risk and some contracts are high risk. Some factors that make a contract low risk are:

  • Small transaction value
  • Small number of unknown unknowns
  • Known likelihoods of known unknowns
  • Small value of consequences from those unknowns or low variance of the values
  • Capacity to control risks or consequences
  • Low information asymmetry
  • Diversification of risk
  • Low variance in quality of goods or services
  • Low diversity in product
  • If (some of) the risk is insurable

An example of a contract that has all of these - buying a bottle of Coca-Cola.

An example of a contract that has none of these - building a Coca-Cola bottling plant.

Your contract is somewhere in the middle.

Are your builders pricing the same thing?

When you requested quotes, did you give each builder the same brief? If you just verbally described what you want, it’s unlikely you said exactly the same thing to both of them.

For example, depending on what you said, one builder might assume they need a structural engineer and has assumed that risk, the other may have assumed that that risk is on you. Without a well defines scope, these types of assumptions are being made all down the line.

For another, perhaps your building work includes a toilet. Who’s supplying that? If it’s the builder, did you specify a make and model: toilets are like cars - they come in all types from budget to super luxury with price tags to suit.

For work of any complexity, you should have at least architectural plans, maybe structural plans, housing renovations usually don’t need services plans (electrical, HVAC, plumbing) but having them reduces risk (and therefore price). You should also have a fixtures and finishes schedule and maybe a technical specification. Basically, the more information you provide, the less risk you are asking them to take - and you pay them to take risk.

Notwithstanding …

It is impossible to quantify or manage all the risks in any contract, particularly a building contract.

You can require the contractor to assume all the risk, but you have to pay them for that - if you can find one willing to accept such a one-sided contract at any price.

The more risk you assume, the less your up front price will be but you will almost certainly have to pay more than the original contract. The less risk you assume, the more you pay up front and the lower the chance this will blow out - but it’s more likely to be more expensive overall. You pay for certainty in this world.

Whichever way you go, you need a contingency fund of 10-40% depending on the complexity of the project.

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