Level the Playing Field - Understand the Construction Contract
Wednesday | December 23, 2009 Filed in: General Remodeling | Kitchen Remodeling | Contractors | Bathroom Remodeling
Building a new home requires learning a new lexicon. The builder definitely has the advantage when presenting the construction contract to the homeowner. Learning some key terminology will help level the playing field.
Final Construction Plans
Final Construction Plans are the architect's or designer's drawings presented at the signing of the contract. These drawings represent a specific construction plan that is contractually binding. Contractual design drawings represent the agreement between builder and homeowner on the specifications of the home build. The homeowner should clarify the meaning of each graphical symbol on the drawings with the architect and builder.
Change Orders
The builder will incorporate changes to the final construction plan by generating a change order. The builder may require a change order for such changes as increasing the quality of fixtures, moving a door, or adding shelving. The builder usually charges the homebuilder a substantial additional fee for issuing change orders. Money captured through the change order process bolsters the profit margins for the builder. Homeowners must insure that the final construction plans capture the final version of the home to avoid change order fees.
Upcharge
The upcharge is an increase to the agreed upon costs specified in the construction contract. An upcharge may be as much as an additional twenty percent. Homeowners often consider the upcharge system a penalty. Decreases to cost of contract through selection process or walk-through will be credited to final cost of house and do not normally incur an upcharge or fee.
Trim
Trim refers to woodworking elements in house such as baseboards, crown-molding, cabinetry and shelving. Trim elements on the final construction contract are commonly redesigned at the time of the trim walk-through.
Allowances
The construction contract establishes line item budget expenses that offer the homeowner flexibility in spending. Although there is an allowance pool, each item may be independent of the other. If the homeowner exceeds the allowance on plumbing, the builder may charge an upcharge, despite the fact that the homeowner under spent on flooring.
In many cases, a homeowner makes the selections at showrooms. For example, plumbing items such as lavatories, showerheads and commodes have price variations from retail, to builder's pricing, to plumbing contractor pricing. The final cost will be based on the plumbing contractor's prices which are considerably lower than either the retail or builder's price. The homeowner is often unaware of how his choices compare against the contractual allowance. The homeowner should request frequent allowance updates from the builder.
The homeowner who increases his construction vocabulary will increase satisfaction with the construction process.
CLICK HERE TO DOWNLOAD AND READ A SAMPLE JENNY’S CONTRACT
Final Construction Plans
Final Construction Plans are the architect's or designer's drawings presented at the signing of the contract. These drawings represent a specific construction plan that is contractually binding. Contractual design drawings represent the agreement between builder and homeowner on the specifications of the home build. The homeowner should clarify the meaning of each graphical symbol on the drawings with the architect and builder.
Change Orders
The builder will incorporate changes to the final construction plan by generating a change order. The builder may require a change order for such changes as increasing the quality of fixtures, moving a door, or adding shelving. The builder usually charges the homebuilder a substantial additional fee for issuing change orders. Money captured through the change order process bolsters the profit margins for the builder. Homeowners must insure that the final construction plans capture the final version of the home to avoid change order fees.
Upcharge
The upcharge is an increase to the agreed upon costs specified in the construction contract. An upcharge may be as much as an additional twenty percent. Homeowners often consider the upcharge system a penalty. Decreases to cost of contract through selection process or walk-through will be credited to final cost of house and do not normally incur an upcharge or fee.
Trim
Trim refers to woodworking elements in house such as baseboards, crown-molding, cabinetry and shelving. Trim elements on the final construction contract are commonly redesigned at the time of the trim walk-through.
Allowances
The construction contract establishes line item budget expenses that offer the homeowner flexibility in spending. Although there is an allowance pool, each item may be independent of the other. If the homeowner exceeds the allowance on plumbing, the builder may charge an upcharge, despite the fact that the homeowner under spent on flooring.
In many cases, a homeowner makes the selections at showrooms. For example, plumbing items such as lavatories, showerheads and commodes have price variations from retail, to builder's pricing, to plumbing contractor pricing. The final cost will be based on the plumbing contractor's prices which are considerably lower than either the retail or builder's price. The homeowner is often unaware of how his choices compare against the contractual allowance. The homeowner should request frequent allowance updates from the builder.
The homeowner who increases his construction vocabulary will increase satisfaction with the construction process.
CLICK HERE TO DOWNLOAD AND READ A SAMPLE JENNY’S CONTRACT