# Forum More Stuff Debate & Technical Discussion  Allowances

## cabuckley

We are doing a major renovation/addition to our house and signed a contract for the total of $K650; we have very detailed specs eg caesar stone in kitchen, blum soft close draws, starfire glass splashback, etc. The builder has put allowances in the contract eg $20000 for kitchen, $15000 for hydronic heating, etc.  
Now that we have got into the build, the quotes for these items (and not having made any changes at all from the original specs) have come in higher eg kitchen is $24000.  
The builder is saying we have to pay the difference or cut back to fit into the $20000 allowance identified in the contract.  
We're saying the builder under estimated the cost of the kitchen and made an inadequate allowance for what was spelled out in the specs.  
What is our position?

----------


## ringtail

If the spec was detailed there is no real excuse for him underquoting as he has most of the info to quote from. Allowances are normally given ( for a bathroom for example) where the client doesn't know or hasn't decided on the spec. In that situation the contract normally states that the client will pay the extra plus a certain % profit margin for the builder. In your case I would get the full price break down for $ 24 k and see where it has blown out compared to his allowance. Tricky and messy times ahead I suspect.

----------


## Gaza

you should have not signed up with allowances, just full lumb sum contract price.  
best bet is to push your builder to find a kitchen that you have documented for the price he might have to get the specs out to more kitchen companys to price

----------


## Master Splinter

It doesn't sound like the builder actually quoted and priced the kitchen, just provided an allowance of $20k...so yes, cut back (the caeserstone can go for a start) or pay more or shop the kitchen plans around to see if there is a supplier who can come in at or under $20k.

----------


## cabuckley

Thanks for your responses; another quick question ....   
Some of the quotes we were given (on which the allowances were based) have now exceeded 12 months and have expired. New quotes are coming in which have all gone up significantly - here again the builder is passing that difference onto us although it is delays that he is responsible for that has allowed the quotes to expire. Where do we stand with this one?

----------


## johnc

> Thanks for your responses; another quick question .... 
> Some of the quotes we were given (on which the allowances were based) have now exceeded 12 months and have expired. New quotes are coming in which have all gone up significantly - here again the builder is passing that difference onto us although it is delays that he is responsible for that has allowed the quotes to expire. Where do we stand with this one?

  
If they are part of the stated fixed allowances then you are up for any cost increases beyond the allowance. The builder is up for increases on anything not specified. It is not cut and dried and if he has caused cost blowouts because of negligence you may have some right to walk away from those increases but you should really spend a few dollars and see your local legal eagle on this one.

----------


## manofaus

Did you get the quotes for the items you described that have increased in price? If he gave you the quotes and entered them as part of his contract then he is liable for the increase in price. If you change the specs of the kitchen after the contract is signed (as in a variation) then you must pay the difference. You could go back to the builder and tell him that you have have gotten another quote which is well under, and tell him he must pay you back the difference including the change in the builders margin, see what he says to that.... 
I had a buiilder quote me for an extension with alot of PC items. He suggested that I have a high PC costs so I could get more from the bank for the build and make sure that we cover all bases. Then he told me that he would give me what we didn't spend back. I quizzed him about receiving the builders magin back (25% on top). He said no because thats there to cover him for price changes.. go figure... basically the builders margin would not change for the project even though we were going cheaper to save cash on the PC items.

----------

