What does the contract say about any of this? IMO, he should provide receipts even if the contract doesn't say so because that is the only way to document the materials. A time log is nice but can easily be faked. But I bet you will cause a huge uproar at this point when you ask for it. He may have them in a shoebox and not organized in any way. The receipts may include things from other jobs.

Why didn't you question his methodology after one or two months?

Eating the mistakes is one of the issues with cost plus. I bet your contract doesn't say anything about how the GC's errors are handled.

As far as what is customary re: adding the % to his labor, it depends on what the contract says. If the contract is silent I would say it is added because it is, after all, "labor". Can you provide some of the key clauses in the contract re: documentation, how time and materials is determined, etc.?

Thanks Sue...all the contract says is Homeowners will pay contractor: time, material and 15%.
I know we were incredibly foolish. We thought because we had known him so long and our son-in-law works for him, that we didn't have anything to worry about.

As to why we didn't question him sooner, we didn't realize until it was too late that costs were so much over. Sounds really naive, but we kept thinking maybe the rest wouldn't be so much. We had no idea how much paint, sheetrock labor etc would be.
When we finally questioned him a couple months ago about how much we would end up spending, he did get all huffy and said we could settle up then if we didn't trust him. We just figured it was too late then to do anything about costs and just wanted to get this over with.

Now I am really mad about how he talked to me Friday and realize how dumb we have been! I am actually scared if I tell him now that we want accounting he might quit. We will owe quite a bit next week because we just had a new concrete driveway and we will owe for the electrician and plumbers final bills.
Don't know whether to speak up now or later.

helenill,
I'm almost having an anxiety attack just reading your post!!!! I am afraid I don't know much about a "cost plus contract" except that it sounds like the builder has free rein over everything!!! Do you not have a construction loan through a lender where draws are taken out for so much work at one time? It just seems like you don't have much protection and the builder can charge you whatever he wants! Maybe you could talk to an attorney just so that he could look at your contract. I understand about the son in law, but if you could just get your contract interpreted by someone; it may help. Otherwise I would feel like I had no control over anything!!! Good Luck!

twotogo, thanks for posting [sorry about anxiety]. No we don't have a loan. I have always been told I am too trusting. I mean this guy was our son's friend and stayed all night at our house numerous times as a kid. He used to work for another friend of ours who built our last house, so we knew he did good work.
I will say my husband was skeptical about a cost plus contract, but our other contractor friend and this contractor told us we would probably save money.
Needless to say, I would NEVER EVER recommend this type of contract to anyone.
It is too late now because the house will finally be done in a couple weeks. I am just wanting to know if we have a right to see receipts, invoices and hours.
We have been to our house almost daily and have a pretty good idea of days when 0, 1 or none of the men worked. Of course the contractor has been in no hurry to get the house finished.

helenill: Don't beat yourself up over this. You were a little too trusting based on your personal relationship. It happens. You won't be in the future.

If I were in your shoes, I would just want to get the house finished and not get into a mess with a contractor who already has most of his money out of me and has already indicated he'd just as soon walk as not. It would not be worth it to me. So, I'd be very businesslike, straightforward but polite. Like you would be with a boss you detest, knowing you will soon be leaving for another job, yet need to stay on good terms.

He's aware that you're financially tapped out and sounds like he's on the defensive about it. Maybe he'll try not to take advantage of you from here on out for fear that you'll revolt and not pay.

My rule has always been that when things get emotionally tense, you just be polite. This is not personal with him, remember--it's just business. And this is how he does business. Try to get through it with no further damage and move on.

Good luck!

We are on a costs plus contract with our builder. Mistakes happen. Some have been ours and we ate it. Some have been his and he's eatem them. Some have been suppliers and they've eaten them.

We've had some great subs and some we've fired. The best ones were brought in by our GC as was the worst (a plumber we fired). We brought in a Kitchen Designer that has been the largest disaster of the entire project both in terms of getting what we wanted and of personal interaction.

But.......stuff happens, things get fixed. We've learned a lot. I'd still do a cost plus contract if we do this again. We don't think it's possible to design everything totally up front so we would rather have our hands on the cost as we detail and figure things out. I'd be afraid that I'd be too tempted to "put it on automatic" if we were focused on a fixed price.

pinktoes, thanks, I agree with what you are saying. But I am still thinking that we need an accounting. I'm drafting an e-mail asking in a very polite way because we need to be able to show what we have in our house if we ever want to sell.
jimonthebeach, thanks also...are you shown any receipts or invoices?

My husband is a GC. We use primarily cost plus contracts for all of our customers. Every month - the customer is given a detailed list of all bills for their project. We give copies of every single receipt. Anything falling into the MISC category has a receipt for it. Your GC should not be offended by being asked to explain his accounting. Good recordkeeping protects both the contractor and the homeowner.

My husband's percentage is added to the labor cost. He is being paid to find and manage labor. Did you sign a contract at the beginning of your build? Your GC should have detailed out exactly where he would be charging his percentage on.

I am so sorry for your rough experience.

scwren, thank you so much for answering. I am glad to hear that your husband gives a detailed list.
I understand and agree about the percentage being added to the labor now. We were just surprised at first because the way he explained at first sounded like it wouldn't.
thanks again. I still haven't sent the e-mail, but now I have more confidence and am still thinking.

Hellenill,

Yes, we asked to get copies of receipts and we do. Some trades are very vague (plumbing rough-in kitchen laundry, two baths: $17.32 (just an example) and others are too detailed (473 drywall screws; $17,373.87). But others, I use to comparison shop and a few we have challenged and a few we have caught double charges. Once you catch those things they seem to not occur from that sub again. We also get multiple quotes, we get our own quotes and we shop the internet. Right item, best cost-return policy-shipping-reputation wins EXCEPT if it's close we will buy local.

I strongly agree with Scwren that your GC should not be offended. Good work extends to the business aspects too. AND I agree with adding the GC fee to labor costs.

Sometimes, if we procure the sub
(new seawall, new dock, pool) we may sit down with our GC and talk about giving him a third or half his fee depending on how much scheduling/coordination/oversight/etc he will need to do to integrate "our" sub with "his" job. That seems only fair to us; we don't want to steal high ticket items out from under him.

Also, for perspective, we are at the house twice a day for a couple hours at a pop, minimum; sometimes all day, we work directly with all the subs on problems, changes, etc. and we run for parts if they need them and, if it comes up, when we are there, we referee and choreograph activities to keep things going with minimal collisons.

Lastly, the only thing we do with our GC by email is shoot him a "needs to be done" list every other day that we both use as a talking tool. ALL the important discussions happen at the house, hands on, with the subs (they are the experts).

jimonthebeach,
As a cost plus contract, how much is the "plus"? It sounds like you are doing a lot of the GC work. Could you elaborate a little more on what the expectations and job description of your GC is? Does he hold the insurance and liablility or the job, too? Does he manage the subs?
Thanks!
comfortdog

Hi Comfortdog,

17%

He is running the job. His permits, his insurance, his subs (with our approval, we've had several discussions). He knows the trade sequences, he knows CONSTRUCTION we know what we want. BIG DIFFERENCE. I am a mechanical engineer so stuff needs to make sense to me but I don't know it up front.

He and I work great together. I think most CG's will build a house using material and methods that they have experience with and confidence in. We tend to push the envelope a lot. So we learn together.

He is earning his money, believe me. He visits our house first thing every morning (6:30) and last thing at night (6:30) and several times during the day and on Sat and Sun if we are there working on things.

helenill: May I play devil's advocate here for a moment? Keep in mind that I am totally on YOUR side, but maybe I can help you develop a strategy. You earlier posted this:

"But I am still thinking that we need an accounting. I'm drafting an e-mail asking in a very polite way because we need to be able to show what we have in our house if we ever want to sell."

Is that the rationale you're going to present to him for why you want an accounting now? Because it's not true and he will know it. The market and a willing buyer will establish the selling price of your home. How many houses are bought without the buyer knowing the price the owner paid for it? A LOT, especially if time has passed and especially if no realtor researches it for the buyer. You do not need an accounting to sell your house; that is NOT a believable rationale.

Further, you have all the proof from your cancelled check records of what you paid for the house. Few buyers would ask to see how much you were charged for the nails, the paint, etc. Your GC knows that too. Again, it's a BAD rationale because you already have a summary record sufficient to prove to a future buyer how much you have in the house.

Answer the question to yourself: why do YOU want an accounting? (Yes you may be "entitled" to one; yes, most GCs will provide one; that's not why you want one.) Now, separate that answer out and look at it critically. Is it a good rationale in your GCs eyes for giving you one?

What you want to find is the rationale that he might be able to accept. And you might not be able to find a good one. You might end up saying just because we'd like to look at a breakdown of what everything cost. It would just be interesting to us to do that. (Do bear in mind that he might be feeling cautious about somehow indicting himself if he's done anything he shouldn't have.)

Now, the other part of your strategy is timing. It is everything. Given that you two had words on Friday, an email he gets on this touchy subject of an accounting right now will NOT be well received. He will read into it vindictiveness or anger on your part. So, today/tomorrow is NOT a good time.

What is? The point at which you owe him a lot of money. So much money that he won't want to walk away from it. That's the point at which you delay payment and tell him that, just like a bank, you want to get an accounting to date so you can "see where you are" before making any more payments. Be careful with this because absent any provision in your contract, you don't have a legal leg to stand on. And he knows that. But he might, out of some good will or whatever, be willing to cooperate.

Myself, before I had any communication with him about this, or paid him anything more, I would talk with an attorney. I don't know what the laws are in your jurisdiction or how case law has been interpreted. Maybe there's a legal argument to be made that he has some obligation even outside of such a provision in your contract. I don't know and you don't know.

But even aside from the law, simply as a personal business strategy, this is the point at which I always hire an attorney and tell her what I'm trying to accomplish and discuss strategies that might work, as well as find out exactly where I stand legally. Just to keep myself out of trouble. I've had attys sit down with me and compose an email for me to send and help me make it sound "civilian" rather than "attorney-like." In this case, an attorney can be a valuable consultant as a strategist, even aside from any strictly legal aspects.

Holding the money, making a reasonable request (asking him to do you a favor, actually, if it's not provided for in your contract), being polite, controlling your anger, watching your timing. Hiring an attorney. That's about all the materials you have to work with in developing a strategy. But you need one. An email now from an angry customer is not likely to produce the results you want.

If you're just angry, and that's your real answer to my earlier question, I'd just try to let it go.

We are doing cost plus and paying for the home as we go out of our own pocket. The GC calls us and tells us he has a draw ready for us just like he would a bank. We go down to his office and he has the draw sheet listing the charges in a spread sheet of different categories of where the money went. Also there are copies of receipts of every charge that adds up to the amount of the draw.

Now our GC has been dragging our build out I think and I think it may be because he knows we are paying for it out of our pocket and not being charged daily interest by a bank loan. We have so much invested, that he really has us over a barrel on that point. If we complain, what really can be done. Sure he will get some subs in gear for a day or two to shut us up, then back to normal. We have a very tight labor market here so some subs have left to go to better paying jobs in the oilfield. Our unemployment rate around here is 3%. I thought that all cost plus contracts worked the way ours does. That you get an accounting of all expenditures. How else on earth would you know if things were right?

I think I should start a website and give advice to people BEFORE they choose a contractor. We are a GC and work on a cost plus basis. They beauty of a cost plus contract is that the client drives the pricing. If you choose a $3,000 Sherle Wagner faucet instead of a $60 Price Pfister, you get charged for it. We don't mark up our materials like a bid contract does, so this is a great situation for both sides....or it should be. It is your responsibility to ask for the information you want, and to keep on top of cost. That is the piece of a cost plus contract that most home owners don't understand. I know that it is late in the day for it but by law in our state a cost plus contractor HAS to supply all of the backup info except internal documents. So ask for it.

And for any of you reading this because you are entering into a construction contract, ask every question that you can possibly think of BEFORE you sign the contract. Also realize that this is business, and conducting business with family, friends of the family, or neighbors generally turns out wrong. Starting with a feeling a familiarity will keep you from due diligence.

Take care!

pinktoes...took a break for Grandson's football game. I completely agree with you that right now is bad timing. The problem is we always pay the first week in the month and this month we will owe at least $35,000.
I agree that my excuse that we will need the receipts for our records is lame. But interestingly enough, when we put our present house up for sale, I drew up a spreadsheet with all the costs of building this house.
The reason I did that was because we had so many extras that aren't obvious to a lot of people. For instance $18,000 for a Koi pond, and extra money for 16" trusses in the attic.around here the norm is 24".
Funny thing is, our real estate agent said to have it on hand if any one asked.no one has though .

But you are right, the real reason that I am contemplating asking now is because I am mad and dont have to worry any more about hard feelings. We have wanted an accounting all along and were lead to believe we would get one. It drives me crazy to hand out money every month with just a vague idea what it is for. So I will wait a few days and make sure to revise my e-mail if it sounds rude or vindictive. Also will call our attorney tomorrow.
Thank you all for helping...by the way the state we live in is Illinois.

I have not read all of the responses, so I'm just responding to your initial post. We did a cost plus contract and we're about 2.5 weeks away from moving in. About twice a month beginning the second month of the build, we received statements from the builder's office that were categorized: (1) No cost plus; (2) Labor; and (3) Materials. All receipts/invoices/etc were attached to each invoice. The "No cost plus" invoice was for specific things that we negotiated to be excluded from the 20% markup (like the lot, plans, utilities, change orders, etc.) We always understood that the builder's markup would be added to labor and materials. The builder has never charged us a dime for any labor he contributed personally ... all of that time is being compensated out of the 20% builders fee.

The builder took care of remedying most mistakes without passing along any charge to us. For example, when he left the dehumidifiers running for an entire weekend without dumping them, and we found them overflowing over 1000 sq ft of gorgeous walnut floors, he replaced the walnut floor at no expense to us. But, our custom made front door came with the wrong doorswing. I specifically wrote on the spec sheet from the door maker: "Approved as to price only; Relying on builder for all measurements and specs." However, he passed the $550 charge for changing the door swing on to us as a change order (i.e., no 20% markup). I still harbor some resentment for that charge because that is precisely why I signed off on the spec sheet the way I did before the door was built. (My apologies for the rant!)

In sum, I certainly do not think you are unreasonable to ask for receipts and invoices to back up the cost-plus arrangement. I'm surprised that he didn't pass those along to you in the first place. Of course, that was something that we talked about with the builder to set the expectation from the outset. I do wish you luck in negotiating this and figuring it out.

We're significantly over budget too and are having problems with getting the house appraised for the amount we have sunk into it. So, don't think that everything would have worked out perfectly even if you had seen all the invoices from the start of the project!

soonermagic..thanks for your very informative reply. Compared to ours, your contractor sounds like an angel. Looks like we will be moving at about the same time...good luck!
Helen