Business of Building e-Source - 10/29/2003 (Plain Text Version)View Graphical Version | Subscribe to NAHB Publications | Email our Editor... Protect Your Bottom Line From Rising Lumber PricesAlthough economists believe the construction industry has weathered the worst of the oriented strand board (OSB) and plywood price spikes, home builders are still paying much more for these materials compared to last year and the market is not entirely predictable. The following sample escalation clauses from NAHB’s Building Products Issues Committee can help protect your bottom line against unexpected surges in the cost of panelized lumber. Under the two options provided, builders can include in their construction contracts language establishing that the home buyer will pay for unanticipated increases in the cost of the materials. Builders are advised to have their own legal counsel review the sample language before actually incorporating it into their contracts. For further information, e-mail David Crump or call him at 800-368-5242 x8491, or e-mail David Jaffe or call him at 800-368-5242 x8317. Escalation Clause for Panelized Lumber Option One The house will require approximately ________ square feet of__________ (describe material: plywood, OSB, other). As of the date of this contract, the Builder’s cost of _________________ (describe material) is___________(price) per thousand square feet, based on ________________ _________________(describe basis for determining cost: name of supplier). The stated consideration to be paid under this contract is based on current material costs without margin for fluctuations in the price of ___________ (describe material). The current market for __________ (describe material) is considered to be volatile, and sudden price increases could occur. The Builder does agree to use his best efforts to obtain the lowest possible price from available building material suppliers. But, should there be an increase in the price of __________________ (describe material) purchased after execution of this contract for use in the construction of this house, in order to avoid inequities, the Owner agrees to pay this cost increase to the Builder. Any claim by the Builder for payment of a cost increase, as provided above, shall require written notice delivered by the Builder to the Owner stating both the increased cost and the source of supply, supported by invoices or bills of sale.
Special Circumstances – Right of Termination Should there be a rise in the cost of ___________(describe material), exclusive of any other price changes, that would cause the total contract price to increase by more than _____________(%) percent, the Builder shall, before making any additional purchase of _____________________ (describe material), provide to the Owner a written statement expressing both the percentage increase of the contract price and the dollar amount of the increase. The Owner may then, at his option, terminate this contract by providing within ______ business days both written notice of termination to the Builder and payment to the Builder for all costs expended in performance of the contract up to the date of termination, plus payment of a prorated percentage of profits based on the percent of completion. Should both notice of termination and full payment, as provided above, not be forthcoming within ________ business days, the Builder may proceed to purchase the _______________(describe material) at the increased price, and the Owner shall be required to pay the increased cost as provided herein.
Escalation Clause for Panelized Lumber Option Two
The house will require approximately ________ panels of__________ (describe material: plywood, OSB, other). As of the date of this contract, the Builder’s cost of ____________________ (describe material) is___________(price) per panel, based on ____________________________ _________________(describe basis for determining cost: name of supplier). The stated consideration to be paid under this contract is based on current material costs without margin for fluctuations in the price of ___________ (describe material). The current market for __________ (describe material) is considered to be volatile, and sudden price increases could occur. The Builder does agree to use his best efforts to obtain the lowest possible price from available building material suppliers. But, should there be an increase in the price of _______________ (describe material) purchased after execution of this contract for use in the construction of this house, in order to avoid inequities, the Owner agrees to pay this cost increase to the Builder. Any claim by the Builder for payment of a cost increase, as provided above, shall require written notice delivered by the Builder to the Owner stating both the increased cost and the source of supply, supported by invoices or bills of sale.
Special Circumstances – Right of Termination Should there be a rise in the cost of ___________(describe material), exclusive of any other price changes, that would cause the total contract price to increase by more than _____________(%) percent, the Builder shall, before making any additional purchase of _____________________ (describe material), provide to the Owner a written statement expressing both the percentage increase of the contract price and the dollar amount of the increase. The Owner may then, at his option, terminate this contract by providing within ______ business days both written notice of termination to the Builder and payment to the Builder for all costs expended in performance of the contract up to the date of termination, plus payment of a prorated percentage of profits based on the percent of completion. Should both notice of termination and full payment, as provided above, not be forthcoming within ________ business days, the Builder may proceed to purchase the _______________ (describe material) at the increased price, and the Owner shall be required to pay the increased cost as provided herein. The NAHB University of Housing offers a course on construction contracts management designed to help builders avoid future litigation. For a list of current business management offerings, click here. NAHB Wins Mexico GrantOn October 1, NAHB was awarded a three-year grant of just under $400,000 from the U.S. Department of Commerce in an effort to expand export markets in Mexico and increase trade information and educational resources for association members. Working in partnership with the Commerce Department, NAHB will focus on the Mexican housing market with an eye toward expanding opportunities for business support and networking and opening trade links for U.S. home builders and suppliers. NAHB President Kent Conine said that the opportunity to work with international markets is opening up an opportunity for association members that can create economic benefits both at home and abroad. “We’re honored to work with the Department of Commerce and our members,” Conine said, “to foster the creation of decent, affordable housing in Mexico and other countries.” The grant, which NAHB will match on a two-to-one basis, will support trade missions by members to Mexico and trade missions by Mexicans to the U.S. Dubbed “Access Mexico,” the project will also support the development of a consultative group made up of U.S. and Mexican partner organizations, a series of international housing conferences in Mexico, and the establishment of an Access Mexico Center at the next three International Builders’ Shows. In addition, the project will create trade support seminars in five major U.S. urban centers in 2005 and 2006, a hub of trade-related information and resources on the association’s Web site, NAHB.org, and a mentorship program through local District Export Councils in three U.S. states. Housing is a key focus of the U.S./Mexico Partnership for Prosperity initiative of Presidents George Bush and Vicente Fox. The Mexican president has set a goal of meeting the housing needs of 45 million new Mexican households by 2030. Rita Feinberg, executive director of NAHB’s international efforts, said that the new program will help the association support its members in entering new markets “where U.S. technology and know-how can contribute significantly to meeting pressing housing demands.” “What we learn and accomplish through Access Mexico will have far-reaching implications for markets in other countries as well,” she said. The project officially got underway in mid-October at NAHB’s First Housing Conference of the Americas in Mexico City. For more information about Access Mexico, e-mail Rita Feinberg or call her at 800-368-5242 x8415, or e-mail Matt Monjan, or call him at 800-368-5242 x8419. [return to top] New Report Puts the Kibosh on Mold HypeWhile doctors and personal injury lawyers have been salivating over the “new asbestos,” a panel of experts convened by NAHB has reported that, while mold can cause allergic reactions in sensitized individuals, there is scant evidence that it is linked to other health problems. Read the full report and find out if “toxic mold” is just media hype. In addition, check out NAHB's other mold resources. [return to top] Give Spammers the SlipTired of seeing your electronic inbox flooded with come-ons for herbal products, vacation packages, and Web sites you wouldn’t show your grandmother? Try the following tips to reduce the amount of junk e-mail you receive:
NAHB has learned of several instances in which enterprising companies have been mining Web sites for contact e-mail addresses and then using that information to solicit new business. NAHB also has found that, after these companies have collected the e-mail addresses off Web sites, they have been indicating they received these e-mail addresses from NAHB, local associations, or other companies or organizations in an attempt to solicit new business from local and state associations. NAHB does not sell or trade e-mail addresses to third parties, a policy formally established at the NAHB Spring Board of Directors meeting in May 2003. [return to top] Improve Your Business Skills at the NAHB Custom Builder SymposiumNetwork with America's finest custom home builders at the 15th Annual Custom Builder Symposium. Taking place November 14 - 16 in Orlando, FL, the Symposium focuses on practical, real-life solutions you can put to use to improve customer service, buy land, market your business, improve profitability, and much more. Click here for full information and registration details. [return to top] Business Opportunities From NAHB’s Councils
Proud of your work? Show it off and give your marketing efforts a boost by entering these awards programs:
[return to top] Builder Bright Ideas
You’ll find hundreds of terrific tips on accounting, personnel, customer service, sales and marketing, management, trades, production, and design in Management Ideas That Work and More! Management Ideas That Work from NAHB’s Business Management Department. Each book costs $25 for NAHB members and $31.25 for non-members. Both are available from BuilderBooks; call 800-223-2665, or visit builderbooks.com to order online. Sign up for the 2004 IBS TodayRegister now for the Full Registration Package and gain access to more than 200 educational sessions at the 2004 International Builders' Show. And, if you are an NAHB member attending the Show for the first time, your Full Registration Package is ONLY $100! Click here to register online. A comprehensive listing of all 2004 IBS educational sessions is now available online! Click here to find out exactly what you and your business need. The educational seminar listing is searchable by seminar title or description, track, or date.
Member Advantage: Save on Postage Costs With Pitney-BowesMembers can eliminate time-consuming trips to the post office to weigh packages and buy stamps while saving up to 20 percent on postage costs with Pitney-Bowes’ Personal Post™ postage meter. For more information or to order the postage meter, call toll-free 888-253-7900. Reference # 999998521. To order online and for details on more than a dozen other money-saving Member Advantage discount programs click here, or go to http://memberadvantage.nahb.org. Go to www.nahb.org to explore the numerous advantages associated with membership in your local, state, and national home builders association. For more information or to contact us directly, please visit www.NAHB.org | ©2003, National Association of Home Builders |