Terminate the contract with the general contractor "early"

But first, I can't imagine that companies with decades of experience calculate so recklessly that they don't already factor in certain fluctuations in raw material prices. And second, they also stockpile and usually have well-stocked warehouses. Of course, they don't have material stored for the next three years. But I assume that for this exact reason they are now starting to let fixed price guarantees expire. And I do think that the general contractor without a fixed price guarantee is more likely to add something on somewhere than without a fixed price guarantee.

The fact that their behavior is changing already suggests that the framework conditions have changed. In this respect, decades of experience may possibly be more of a hindrance than a help in assessing the current situation and especially the future.

1. Negligent costing is a very harsh term for the fact that construction companies have to operate with dangerously narrow margins due to competitive pressure. 2. Idle inventories are the first consequence of price spikes in material procurement. If the price spikes are not just a brief shower, restocking is also not done quickly. So the stock levels are sufficient - but only with luck - to avoid short-time work due to supply shortages. Read here for a few weeks, then you will see how many construction delays are already occurring in the field.

A regionally operating general contractor is at least relatively a better choice in any economic situation. In addition, the legal departments of the big names may come up with more tricks to soften price commitments.

Or as our local contractor said: I don't want my children to get beaten up on the football field on Sundays.

What I actually meant with my statement is that an experienced general contractor can probably estimate how long he can offer fixed price guarantees before his own risk from rising raw material prices becomes too great (that’s what “recklessly calculating” referred to).

The regional aspect (or in the case of the other general contractor, the friend who works there) is also one of the main reasons why we have this general contractor on our shortlist. He simply knows that he will run into us more often over the next few years. And I have known the friend who works at the other general contractor since birth; he would never leave me stranded if there are any problems. Nevertheless, we will also listen to what the big players have to say so that we can better compare.

I actually meant with my statement that an experienced general contractor can probably estimate until when they can offer fixed price guarantees before their own risk due to rising raw material prices becomes too great (that’s what "reckless calculation" referred to).

I keep hearing that construction companies have never experienced times like these before. Unfortunately, all the experience doesn’t help that much anymore.

The only thing a general contractor can currently do is to conclude fixed-price agreements with the tradesmen early on. However, this presupposes that the tradesmen are willing to do so. Material is absolutely unplannable right now. What do you think will happen to concrete or steel if there actually is a gas embargo against Russia? Then the previous price increases will be a joke. And even without an embargo... if we now diligently buy LNG at double the price, that will also be reflected in the prices. And this affects all trades in one way or another.

If you have signed the notary contract and purchase the property from the municipality, I don't see a big risk there. Can you ask the contractor if they can include a clause in the contract "subject to successful purchase of the property," so to speak? Regional contractors usually do that. We had a contract with the contractor when our financing was not yet 100% secured. We then included a clause in the contract "subject to financing approval," and when we signed the contracts at the bank, we removed that clause with signatures from both parties. This way, both sides were protected and the contract could still be signed under the original conditions. It saved us a five-figure amount of money.