Politely decline to pay, explain no rate was discussed before hand and you are not comfortable negotiating one afterwards. I wouldn't add anything else, but if you feel the need to explain why he didn't get the contract, politely let him know that a more detailed bid would have helped.

On a cost plus contract you should have access to every sub bid, including what is in the bid. There should generally be multiple bids on each item, and when picking a bid other than the lowest a brief explanation is warranted. The builder we are using only got one framing labor bid. He gave me some very legitimate reasons why he chose the gentleman he did, he told me about how much I could save going a different route and we decided it was not worth it. Without access to bids there really is no reason for a cost plus contract, you might as well do fixed cost and be done with it.

On a side note - a 55k price change would need a very serious explanation in my book, and would call into question his entire bid. There has to be a reason the sub didn't give a competitive bid in the first place.

It is unusual to bid a Cost Plus project since the prices would be part of a theoretical budget and not fixed unless there was also a Guaranteed Maximum Price. However, it is normal to bid the Fee.

I think what you might have done was negotiate with 2 builders and awarded the contract to the one with the most convincing proposal. That's not unusual. But you'll never know which one would have saved you more money especially if the scope was not well defined in the construction drawings

You might owe him something for early consulting advice if it involved real work but not for the proposal work.

Thanks for the comments.

@bry911 I should have been more clear about the framing bid. He said he got 3 bids, the lowest of which was $215k. Early on when I asked if there was any wiggle room at all, he said maybe 3-4%, but the subs are already on very tight margins. He tried to steer me towards roof trusses, which only cost me $175k. I have a feeling he had a financial interest in that route. We almost went ahead, but luckily I waited to get the second bid back, and we were surprised when his conventional framing bid came back $145k.

When I told GC #1 that he wasn't even close to GC #2's bid, he came back the next day and said he found another framer who wanted more work from him and was willing to do the framing "at cost" ($160k). It was still $15k above GC #2's framing bid (and certainly more than the 3-4% margin he mentioned earlier), which was much more in line with the numbers people were telling me it should cost.

I think the foundation of doing a Cost Plus contract is being able to trust your GC. He lost my trust with that (plus 2 other) inflated bids that just didn't add up, and hence lost the contract. Now he is asking for reimbursement for the time his employee spent to put together a scope of work, and I'm not sure if I should entertain that or not.

@Sanford W., Neither proposal was heavily convincing, it was more that we went with our gut as to who we trusted to be straightforward. The construction drawings were complete (as far as hard construction, excluding usual allowance items), and most of the bids were within $1000, some exactly the same. However, a few were wildly different (framing, roofing, and rough electrical, which are all specified on the plans).

Early on he showed us around 2 of his houses that were going up, and just before plans were done he told us to get started with an interior designer. Otherwise, everything else happened after we got the Cost Breakdown. He offered to get samples of a different roof tile that could save us money and took us to another house to show us the finish work. Do you think that deserves any compensation?

when a trades person takes time to take you to
another house to show the finish work, yes there
is compensation due.
otherwise he/she is just donating their time,
like yours has a value.

In my opinion, when a person takes time to take you to another house to show you their work - It is a part of their sales pitch. He is not donating his time, he is investing it in getting your business.

An easy test is - Would the G.C. have sent you an additional bill for the work he did, had he gotten the contract? If he would have, then compensation could be appropriate. But even then after the fact is a bad time to negotiate it, since you have no obligation to pay. If that time would not have been billed separately had he gotten the contract then it is just part of the sales pitch.

One thing that everyone in any service field must do, is make you comfortable with the fee versus value of their services. Doing so is simply part of doing their job. He didn't take you around to show you his work to give you ideas for your house, he took you around and showed you his work in hopes of adding perceived value to his work. Many people bill for consultations - doctors and lawyers among them, he could have discussed an hourly rate with you before hand. He chose not to, you simply don't owe him. Paying him simply reinforces that what he is doing is OK. Don't pay him for the sake of his future customers.

I would not consider paying someone unless a cost was disclosed up front, and I had a choice whether to move ahead and incur the cost.

$145k to $215k for the FRAMERS??? How big is your house??

And yes, in cost plus you should be privy to ALL the subcontractors ORIGINAL proposals/scope of work, not something regenerated by the GC.

Re: framing cost, how big is the house, where are you located and how complicated are the roof lines?

I've built several houses and showing a client your work is simply part of the process. It is part of the salesmanship in showing you build a worthy product. If there was any thought about billing for time, it should have been discussed up front. Do not feel any obligation toward this GC. Trust your instincts.

@omelet, @bry911: We had an uncomfortable conversation when I think he felt like he was losing my business, where he mentioned that if I were to use someone else, the "honorable thing to do" would be to compensate him for his time. It didn't sit well with me and was basically the nail in the coffin. When we started this project, it was his bid to lose as he was recommended by our architect and got with us early on, but I just never felt like we communicated that well. We never discussed any sort of compensation for the bidding process because I think he felt like he had us, which basically he did until our second bid came back and we were shocked at some of the discrepancies. Only then did we do more cost investigating and found things to be way out of line.

@architectrunnerguy: Our house is not big, a little under 4,000 sq ft. To be more specific, the framing bid from both guys did include rough framing, Hardi-plank siding and trim as well. From the people I talked to, framing costs in our area (Southern California) run ~$25-27/sq ft (M+L). I never got a hard number for Hardi-plank, but I assumed it was somewhere between $10-12/sq ft. He did email me a copy of the bid from his framer, but I know that could be either doctored or colluded with.

@Roper: I think our roofline is more complicated than average, but it's not like we have round turrets on every corner. See this post for the roof plan.

You would not add $10/sq for hardiplank installation, probably something closer to 1.50 - 2.00 in LA.

What did your actual framing materials bids come in at? You should see multiple bids with line items. Something seems off. We are framing 2.5 stories @ 5300 sq.ft. above grade on a basement with brick cladding and our materials bid came in well under yours. I know California is higher but our brick and size should make them comparable.

For the 215k bid, there was no breakdown of costs whatsoever on the framing bid. With the GC are now using, lumber costs come out to about $53k, or approx $13/sq ft. I haven't seen the bid for the rest of the cost breakdown, but I know labor comes in around the same ($11-13/sq ft), and if they're using the framers to do siding, I figured I'd add another $1-2/sq ft for siding material, for a total of $10-12/ft for siding.

First, I don't understand how what you have is a cost plus contract. Unless I am not understanding the process you are ending up with none of the benefits of a cost plus contract and probably all of the exposure, which you are not even in a position to know. There is a thread that I suggest you read here on GW - fixed-vs-cost-plus-contracts. Pay special attention to the things that cookncarpenter and renovator8 say. I think you will see the deficiency in what you have. To quote a portion of what Cook says in that thread here -

After an initial meeting to discuss the project and what the contractual basis and subsequently my fee will be, the owner supplies me approved plans to distribute to subs for bid. I then compile all the proposals from my subs, which are fixed bids, spelling out exactly what their contract includes and excludes. I then share and review these bids openly with owner, and we discuss possibly alternate or multiple bids in some categories if the budget is not met on the first pass.

These fixed bid costs are passed on directly to the owner, and my client now knows the "cost" and my fee (which is usually a percentage, but not always) and has already been negotiated, therefore another known cost.

Next, I am having trouble understanding your math for the siding so I just, looked at your plans and got the amount needed, then got a per piece price for downtown LA and compared it with here. California came out slightly cheaper, I assume James Hardie's plant is closer to California. Then called my lumber yard to see what we were looking at for a full quote. The materials quote for full retail in my area came out to $10,339 and install would be much less than $6,000, my actual quote since I am building a house with their wood came back at $7,443. Using full retail prices, with siding installers (which would be more than using framers already on site), and fully trimming out a craftsman style house you are going to be much less than $10 - $12 per square.

As a point of reference, we are currently framing two stories, 8800 sq feet under roof (6700 air conditioned sq feet) with simpson fasteners/ties, some metal beams/supports for two large spans and very complicated roof lines in North Texas for $142,000 cost (plus 14% GC fee, of course). This bid is from one of the most reputable framers in our area and our house is probably the smallest one they are working on. I know costs are different all over, but the original poster's framing bid seems high even if you back out the siding.

Roper what part of North Texas $142,000 seem high you can find framers $2.75 to $3.00 s.f.

Lumber is mostly a commodity, and an apples to apples bid should not vary more than 5% from one lumber company to another. In a cost plus system you should have all of the bids in front of you and you should be able to compare line by line and see exactly what each bid is for. What Sanford was referring to above, is that in a cost plus build, the only significant variance between the bids should be the G.C.s fee. Having a lumber bid drop significantly could just mean they are not bidding the same materials and in the end you are going to spend the same.

There are a lot of things in a house that price per square works well on. Unfortunately, the framing material is probably one of the worst. I am using a simple house with no steel. My load bearing walls all carry all the way to the basement. I designed my house backwards. I started with an outline on paper and then found the price break points for I joist spans that would give me the deflection I wanted, I chose the maximum distance from my center wall to the back wall using that. I used standard size windows, actually bought my entry door on a closeout 6 months ago, very simple roof lines. My framing package came back about half of what my neighbor's smaller house did.

@gregwilcox - Southlake/Westlake area (NW Dallas suburb). Framing is usually about 10% of the build cost for my builder. There were three bids and my builder's "go to" sub was also the cheapest sub. If there are subs doing framing for that cheap, they certainly aren't being used by builders in this area.