10% Escalation clause to new pool contract

[frank411]

Met with a pool builder here in Central FL and they mentioned there would be a clause on the contract to allow them to charge 10% additional "just in case". I am very hesitant about this.

Is this typical nowadays? If so what would you recommend. This is significant bc it's 10% of a estimated $75000 and it's the fastest builder locally with good reviews.

 

[V___25]

Does it outline specifics of what that 10% is for? Like is it only for the increased cost or inflation of materials? Or can it be invoked for any reason the PB sees fit? Like if they screw something up and have to re-pour a section of concrete (IDK, I'm making this up), can they charge you that 10% or $7,500 more to fix their screw up? Does that make sense? I would also be very leery of that and would want it to outline every single that those funds can be used for. Don't charge me 10% more because you ordered and installed the wrong light or something stupid.

 

[Pool_Medic]

Brutal of them, they know prices when quoting. We are getting weekly updates from all our suppliers regarding increases.

 

[frank411]

Does it outline specifics of what that 10% is for? Like is it only for the increased cost or inflation of materials? Or can it be invoked for any reason the PB sees fit? Like if they screw something up and have to re-pour a section of concrete (IDK, I'm making this up), can they charge you that 10% or $7,500 more to fix their screw up? Does that make sense? I would also be very leery of that and would want it to outline every single that those funds can be used for. Don't charge me 10% more because you ordered and installed the wrong light or something stupid.

It's supposedly for costs/inflation purposes. They can say that, but how would I know and even worse having to wait until September to start the build and 6 months for completion. Even more risk of paying this.

So I proposed them forwarding their invoice to me if they would be using this clause so I would at least have that protection. They said no lol.

I'm at a loss.. paying the extra $7500 would mean losing one of the key features of the pool and I'm wary of being taken advantage of.

 

[JoyfulNoise]

Move on and look for another builder. Unfortunately there’s no shortage of work so a builder can play these kinds of games but that doesn’t mean you have to accept it. If they won’t show you proper invoices for the excess costs then they can basically say whatever they want and add a 10% slush fund on to every job.

I’d keep looking.

 

[kul]

If they are putting the 10% wiggle room in writing, I believe they will 100% add it on. So maybe think about whether you’d be ok with that very real possibility and account for it as a given.

 

[newdude]

Last year when we signed I was having an old friend like chat with my PB. He said that things were so crazy (then) that he was forced to pass it along to the customers and doing so without it written in their contracts.

In the old days, if they lost money on some builds it was a cost of doing business. Boohoo, they made out like bandits overall. But they can't do that on more than just a few. I totally get the builders get their weekly price updates, but what if a delay happens with the last crew and the next one changes their material price 2 weeks or 2 months later ?

I 100% expect the dishonest ones to abuse that policy if they have it, but i don't fault the honest ones for trying to not go belly up.

If you had your heart set on that builder, I would judge their character if they agree to give you a copy of the material invoices either way. An expected price and the actual one, adjusting your cost accordingly. If they don't want to pay more if the volitale prices go up, you shouldn't have to pay the high price if they go down during the unforseen delay. Fair is fair, right ?

Most likely, the builder has so many people agreeing to their demands, they will blow you off. And there is your answer, if so

 

[.ben]

We signed in October and there was no such language in any of the contracts we reviewed.
If it is in your contract, I would just assume you will be charged the 10% and figure if the build is still in your budget.
If it were me, and I had my heart set on this builder,I would try to negotiate 5%.

 

[TampaKathy]

I had a similar convo as Newdude with my PB...prices were rising so fast that they started passing the costs onto their customers...thankfully they didn't pass any onto me. I would assume you will be billed the extra 10% and use that price when comparing to other PBs.

 

[02slowride]

I had a convo with my builder that had the following clause in the contract, “Due to current market volatility and delayed start times, pricing is subject to change with rising materials cost that are beyond our control. We will hold to our contract as close as possible and if increases do occur they will be charged at cost (no profit added).”

It was explained to me that they’ve had builds extend past 12 months when constructing alongside a new home build when the home build project is significantly impacting their ability to progress the pool.

As others have suggested above, if this price increase were to unfold during your build and the builder wants to flow down the increase, they must be prepared to open book accounting, effectively making them a time and materials contract (as opposed to the implied fixed bid).