Financial bank guarantee in redevelopment

Querist : Anonymous (Querist) 23 December 2011 This query is : Resolved
Dear Experts
I am aware that Financial Bank Guarantee of 20% of cost of project is required from the developer.The developer selected by my CHS is providing an guarantee of RS 1 CR on reducing balance basis.He has refrained to comment on the cost of the project.

Question
1)Who determines cost of project?
2)Should such guarantee(entire) be valid up-to the completion of project or be on reducing balance basis?
3)What legal paper/document will developer provide to CHS ensuring such guarantee?
4)If the developer is a group company & the guarantee is taken by one company where as the project is done in other company ; is such guarantee valid/beneficial to CHS ?
5)Is performance guarantee also required to ensure timely completion of redevelopment project?

Kindly advise

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prabhakar singh (Expert) 24 December 2011
1)one who undertakes to develop.
2)options are open as per interest of CHS.
3)Bank guarantee.
4)Insist on Bank guarantee.
5)Yes!would be better for CHS.

Querist : Anonymous (Querist) 24 December 2011
Thanks Sir
But ,regarding the cost of the project,can the same be estimated by the Project Management Consultant/Architect appointed by the society as he is from the same field
Also 20% will cover entire project even the new flats this will reduce the risk cover of existing flat owners
(if we do reverse cal cost of project = Rs 5Cr )

Devajyoti Barman (Expert) 29 December 2011
It is better to keep the safety of flats first than the costs.

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