Building and converting Are craftsmen's offers binding?

Invest plenty of time in writing accurate requests for proposals and clear agreements with craftsmen.

by Jürg Zulliger 17 Mar 2016

Are the costs stated in offers binding?

Under the law, there are basically two possibilities when awarding a contract. The first is for invoices to be issued according to the value of the work done, i.e. based on the time taken, amounts used and surface areas for floor coverings, walls painted, etc. If you choose this option, the price offered is not really binding, because at the end of the day, the contractor invoices you according to the effective costs. This is referred to in the trade as "scheduled work". Unless otherwise agreed, this is the normal method for invoicing – and you run the risk of the project ending up more expensive than what you accepted. The other option is "firm commitment": the offer is binding and the contractor must complete the work for the price offered.

How can you make sure you won't have to pay extra?

If you want a fixed all-inclusive price, you must make this very clear, preferably with written confirmation or a contract. This must include all the details: material and travel costs, preparation work, VAT, etc. Sample contracts for craftsmen's work can be useful, such as those available from the Swiss Association of Real Estate Owners (HEV). It’s also important for owners to tell the contractual partner or architect how much financial leeway they have: the maximum affordable budget, limits arranged with the bank, etc.

What needs to be in the offer?

The offer should be as detailed as possible. Even for smaller orders, it's worth viewing the property on site before awarding the contract. This lets the craftsman or contractor assess the specific situation accurately. It also means they can't claim at a later stage that additional costs were necessary due to special circumstances. According to Pavlo Stathakis, attorney at the Swiss Association of Real Estate Owners (HEV): "Clients usually ask for several offers, then award the contract to one craftsman." He recommends drawing up a written order confirmation that repeats the services ordered and their price.

Where does the 10-percent rule come from?

A Swiss Federal Court judgment (BGE 122 III 61) on a serious cost-overrun case is frequently quoted. The court concluded that the client must be able to rely on the cost estimates given by an architect. However, a tolerance of 10 percent is acceptable. In practice, people often say that you have to tolerate differences within this area – unless the client has clearly agreed on other conditions, or on an all-inclusive price. According to the standards of the Swiss Society of Engineers and Architects (SIA), architects are permitted a clearly regulated tolerance limit: for preliminary projects with cost information, tolerance of ±20 percent; for construction or conversion projects worked out in detail, tolerance of ±10 percent.

Where can homeowners get advice in the event of a dispute?

The first point of contact is the legal service of the regional sections of the Swiss Association of Real Estate Owners. Legal advice up to a certain level is free of charge for members. You can also ask other associations and organizations, independent client advisors, or other experts to check the facts and suggest a compromise, depending on the situation. Homeowners can also contact specialist associations such as the Swiss Society of Engineers and Architects, the Swiss Association of Painters and Plasterers (SMGV), or other specialist organizations, which investigate such cases and suggest solutions. For disputes above a certain sum, you may want to consider getting a construction attorney. Pavlo Stathakis of the HEV adds: "Contrary to widespread opinion, you can’t always save on legal fees by calling in an attorney at the last possible moment, but you can often do so by involving an attorney as soon as possible as your representative." In retrospect, it’s often clear that it would have been smarter to get advice from an attorney at the start of negotiations and when signing contracts, rather than when serious problems arise.

Am I allowed to hold back payments to use against the contractor?

The basic principle also applies with payment terms: the conditions set out in the contract must be observed. It often makes sense to agree with your construction partners to finance the work in stages. If one stage is not yet complete, or if there are defects, payment for this part can be held back until the work is finished. Any payments made should correspond to work already completed at the building site, deliveries of material, or visible progress in the construction work.