Construction cost increase 2013

Hello dear forum,

I would like to get your assessment regarding the increase in house construction costs in 2013. Our general contractor is insisting on an adjustment of the fixed price due to various delays and cost increases in materials and wages. Contractually, this is also okay and not disputable. He wants 2.5% and argues that this is more than accommodating since they experienced price increases of over 7% in 2013. However, looking at the construction cost index and the collective agreements of the IG Bau, this seems quite excessive to me. What is your opinion or what are your experiences?

Thanks in advance.
Best regards, Carsten

Hello,

one should not only look at the wages which have also increased (2% wage increase usually means double for the employer due to social security contributions).

Material costs have also become more expensive. The factories are running at full capacity, the smelters are buzzing.

the longer the interest rates stay this low, the higher the prices will climb.
I think 2.5% is quite a fair approach.

I don’t know the contract, but woe betide if he insists on the 7% after all....

Is there a special right of termination in the event of a increase in the fixed price, similar to car insurance? Or can he dictate to you ("he insists") what he wants? You write: contractually okay?

Thank you very much for your feedback. There is no special right of termination directly due to price adjustment, however, we could withdraw at any time before the start of construction with a down payment of 5% of the construction sum. With an increase of 7%, this decision would be quite easy :-)

By contractually okay, I mean that the corresponding clause regarding the price adjustment is included in the contract, but not explicitly quantified. As described, they allegedly refer to cost increases for materials and wages.

And the over 7% rather seem to me like an argument that we are ultimately glad to come out with "only" 2.5%. The Federal Statistical Office reports price increases for new buildings of only 2%. So there is a solid 5% difference there.

@HilfeHilfe: Collective agreements usually do not have a disproportionately large effect on gross employer costs. For the year 2013, I think it was 3.2%.

Hello,

what good is it to you if he had charged 7%, you pay a 5% discount and come out ahead?

Then the stress begins, you look for a new provider who is also struggling with the general price increases. Supply and demand. The companies are busy.

Regarding the tariff, in addition to wages, material prices are also rising. And in my opinion, they weigh more heavily in the price increase!