FINANCING COSTS IN THE EVENT OF DEVIATIONS IN WORK PERFORMANCE UNDER CONTRACT STANDARDS

Abstract

When carrying out construction contracts both, the employer and the contractor, regularly have to deal with “financing costs”. The financing costs cannot be set as a flat rate, since these can vary from one building contract to another. The pre-financing period can be determined from the conditions of the construction contract. These conditions together with the entrepreneur’s financing interest rate forms the basis for calculating the financing costs of the offer. Deviations to the construction contract can result in construction claims and often lead to extended pre-financing periods, which lead to additional financing costs. With the help of a survey the authors investigate how often the calculated pre-financing period deviates from pre-financing periods with claims. This study has the objective of drawing attention to the issue of additional financing costs due to claims. With the help of a survey the authors investigate, how often the calculated pre-financing period of the offer deviates from the pre-financing period of a service deviation performance variation / a claim. The aim of the questionnaire is to point out the topic of additional financing costs in the event case of performance deviations in the performance of services. The study investigates solely projects under national norms respectively Austrian construction contract standards which favour unit price contract. This paper explains and illustrates the impact of additional financing costs resulting from deviations from the scope of works.