Builder overcharging

Bruce_A

I got three quotes for a new build project for a 2-3 bed house on my land in London. My architect, also acting as contract manager, and civil engineer pushed me towards one contractor which they had suggested as they had worked with him before. I agreed as his quote was very similar. As planning permission was running out, the contractor prepared the site.

At this stage Covid started to bite and he requoted at a substantially higher price which he said were inevitable due to the inflation this caused. I accepted the quote for Phase 1 (the shell build) as the architect and engineer, whose expertise I was relying upon, raised no red flags. As the cost for Phases 1 + 2 were double the original quote, albeit there were some minor design changed, I decided to find my own contractors amd od some work myself for fitting out

The Phase 1 work has been completed satisfactorily and paid for, bar the retention. I have since discovered items seem to have been massively inflated, some by as much a 10x. He has refused to provide evidence to justify the increased costs. His response is "Well, you agreed the prices".

It also appears that I have been double charged for one item and charged for walls that were omitted from the final design. I don't forsee any problem recovering this element.

The contract gives options of mediation and arbitration via RIBA. I sent the parties invovled a copy of the mediation application form a week ago for signature but so far it has not been returned.

I feel badly let down as the architect and engineer were fully aware that the idea was to build at a profit. I was assured they could provide a turn-key solution without me having to do any work myslef. However, even excluding the value of the land and the self-build VAT exemption, the build cost would have been well in excess of the market value had I allowed the contractor to complete both phases. 

What are my options? Do I have any chance of recovering the overcharges? What responsibility does the archtect bear as contract manager? Any advice welcome.

eskbanker

Won't this all depend on exactly how the contract is structured, including the extent to which it committed you to using the contractor, how cost changes would be accommodated, and change control mechanisms in a wider sense?

TELLIT01

If the contractor is correct that you agreed the price you would seem to have few grounds to do anything about it.  What items were inflated by as much as 10x?  Material prices have increased massively over the past couple of years.  We were having work done to rebuild timber raised beds in the garden and agreed that we would pay for any increase in timber prices.  The contractor showed us prices of timber which had increased by about 40% in the space of a couple of months.

ComicGeek

Terminology is so important here. Was the architect employed as contract administrator, rather than contract manager? Normally the architect's role is to administer the contract not to provide cost checking.

Was the revised Phase 1 price the contract sum quoted within the contract, or was this a variation or adjustment post contract?

Was the contract sum just a fixed price against the project, or a itemised scope of works specification with costs identified for each part?

If you were given a price, agreed to it and proceeded with the works, I can't see any justification for complaining. You should have retendered Phase 1 once the contractor increased their price. You say that the architect (and civil engineer, but they would not have any duty of care in relation to reviewing your tender costs) didn't raise any red flags, but that is a very carefully worded acceptance that you didn't directly ask them.

Bruce_A

TELLIT01 said:

What items were inflated by as much as 10x?  

One example is 'wall penetration services' (diamond core drilling a couple of holes through 300mm or reinforced concrete for drains). He charged £7,000 materials + £700 labour. I can't image what materials other than the drill bit would be required. A local specialist quoted £650+VAT per day, inc. materials, for as many holes as he could drill in a day.

Bruce_A

ComicGeek said:

Was the architect employed as contract administrator, rather than contract manager?

Was the revised Phase 1 price the contract sum quoted within the contract, or was this a variation or adjustment post contract?

Was the contract sum just a fixed price against the project, or a itemised scope of works specification with costs identified for each part?

If you were given a price, agreed to it and proceeded with the works, I can't see any justification for complaining. You should have retendered Phase 1 once the contractor increased their price. You say that the architect (and civil engineer, but they would not have any duty of care in relation to reviewing your tender costs) didn't raise any red flags, but that is a very carefully worded acceptance that you didn't directly ask them.

The architect was employed as the contract manager.

As planning was due to expire, the contractor cleared the site and erected hoarding prior to the contract being signed. The contract was signed on the basis of the revised contract. The contract was fairly well itemised.

Yes, in retrospect, I should have gone out to retender :-( However, I was assured by my architect and the engineer that I would still have a profitable project. I relied on this opinion, believing I was receiving best advice.