Terminate the contract with the general contractor "early"

There will be no more fixed price guarantees. It is simply no longer possible. Every day I am faced with ever higher and more severe price increases and inflation surcharges.

Just received again from an important supplier.

From 05.04.2022 a 5 percent inflation surcharge, for parts delivered in 2023 another 5 percent on top.

That makes a total of 10 percent and we do not yet see the end of the road here.

With many of my suppliers, there are only daily prices. Few want to commit to prices for more than 10 days.

Yeah, you just have to remember that the material costs in a house construction don’t make as much of a difference as the wages. If your wood gets 10% more expensive, the roof frame doesn’t cost 10% more. Maybe 2%. And the craftsmen costs can still be calculated well today.

We had a case in the company where a service provider wanted a 20% higher travel allowance because the fuel prices had risen by 20%. Sorry, but that’s ridiculous and in the end he settled for a fixed subsidy of a few euros limited to 3 months.

We will still listen to what the big players have to say, so that we can compare better.

You can actually save yourselves the trouble, they have learned very thoroughly how to make a better impression in marketing.

The only thing a general contractor can currently do is to conclude fixed prices with the tradesmen early on.

Someday, when I have a lot of time, I'll explain how a general contractor works ;-) If it were that easy, it wouldn't be so great either (delicious follow-up insolvency).

We signed the contract with Heinz von Heiden at the beginning of February, shortly after that the purchase contract at the notary. Everything is possible, you just have to be granted a right of withdrawal. This is available with Heinz von Heiden. Among other things, if the financing does not work out or if you do not get a building permit. That is why we also secured the fixed price from February; the advisors pointed out to us that the prices would increase the following week.

From 05.04.2022 a 5 percent inflation surcharge, for parts delivered in 2023 another 5 percent on top.

That makes a total of 10 percent

If you always calculate like that, you will soon be broke...

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

Great, thank you very much! These are definitely very good tips. Even if I don't expect any problems, it doesn't hurt to include such passages as a precaution.

There will be no more fixed price guarantees. It’s no longer possible. I am receiving daily increasingly higher and more severe price increases and surcharges here.

Just received from an important supplier again.

Starting 04/05/2022, a 5 percent surcharge for inflation, and for parts delivered in 2023, an additional 5 percent on top.

That makes a total of 10 percent, and we still don’t see the end of the line here.

With many of my suppliers, there are only daily prices now. Very few are willing to fix prices for more than 10 days.

So far, we have had talks with three general contractors, and all still offer fixed price guarantees. No idea whether they’ll still find ways to pass price increases on to us; but without a fixed price guarantee, it’s probably easier for them.

And of course, every crisis is different, but there have also been crises in the past with massive impacts on the construction industry (e.g., the oil crisis in the 1970s or more recently the corona crisis). So I wouldn’t say decades of experience are useless when it comes to factoring rising raw material prices and supply bottlenecks into pricing.