As a homeowner or contractor, finding the right building contract in New Zealand is essential to ensuring a successful and stress-free construction project. There are several types of building contracts available, each with its own set of advantages and disadvantages. In this article, we`ll explore some of the most common types of building contracts in New Zealand.
Fixed Price Contract
A fixed price contract is one of the most common types of building contracts. This type of contract involves the builder providing the homeowner with a fixed price for the entire construction project. The price is agreed upon upfront and includes all labour, materials, and other associated costs. This contract type is beneficial for homeowners as it provides certainty around the final cost of the project and allows them to budget accordingly.
Cost Plus Contract
In a cost plus contract, the builder is paid for all the actual costs incurred during the construction project, plus an additional fee for their services. This type of contract is beneficial for contractors as it provides transparency around costs and allows them to earn a profit on the project. However, it can be risky for homeowners as the final cost of the project may be difficult to predict.
Guaranteed Maximum Price Contract
A guaranteed maximum price contract is a combination of both the fixed price and cost plus contract types. In this contract, the builder agrees to complete the construction project within a set budget, which is agreed upon upfront. If the project is completed under budget, the homeowner will receive a refund for the difference. However, if the project goes over budget, the builder is responsible for covering the additional costs.
Construction Management Contract
A construction management contract involves a third-party construction manager overseeing the construction project on behalf of the homeowner. The construction manager is responsible for hiring subcontractors, purchasing materials, and managing the construction process. This type of contract is beneficial for homeowners as it provides them with an experienced and knowledgeable professional overseeing the construction project. However, it can often be more expensive than other contract types as the construction manager will charge a fee for their services.
Design and Build Contract
A design and build contract involves the builder managing both the design and construction of the project. This type of contract is beneficial for homeowners as it simplifies the construction process by having a single point of contact. It also allows for greater creativity and flexibility in the design process. However, it can be more expensive than other contract types as the builder will charge a fee for their design services.
In Conclusion
Choosing the right building contract in New Zealand is essential to ensuring a successful construction project. It is important to carefully consider the advantages and disadvantages of each contract type before making a decision. By selecting the right contract type, homeowners and contractors can ensure that their construction project is completed on time, within budget, and to their satisfaction.