First question; what does your contract say?

What sort of construction contract do you have? It is obviously not a fixed fee/lump sum contract.

Contract has a fixed price with each area of building broken down in a separate exhibit. For instance - framing would be broken down by labor and materials. Each section then adds up to total price. Does that make sense? problem is each section has been over budget so far so we will be coming in over the fixed price in the end. We are paying cash btw.

I also wanted to mention that we spent months going over every single line item - we have never built before and I guess we trusted that he "knew the numbers" when they were presented to us.

Shoot - one more thing. The builder gives me all the invoices and then I cut him a check to pay the subs. I also pay for materials up front.

If the line items are considered "budgets", you do not have a Fixed Price contract. It appears you have a Cost of the Work contract without a Guaranteed Maximum Price. Since you are also responsible for paying the subs and suppliers you probably hold separate prime contracts with each subcontractor and the "builder" may be acting as an advisor with no responsibility for the subs or the project cost.

Are you reviewing subcontractor competitive bids and making the final selections with the advice of the builder? That may be the only cost control you have in this arrangement.

Sounds like your builder is taking you to the bank... When we met with our builder we came up with a set fee.. Everything was based on the site plan.. The ONLY items that have gone over are due to upgrades that we wanted.. The only area that we went over that was not an upgrade was excavation.. Contract specified they would remove all dirt "as per site plan".. Well the site plan called for X amount of dirt removal and we surpassed that amount.. Thankfully the builders budget ate some of the cost, however there was about 10k in dirt we were responsible for.. Sounds like your builder only gave you allowances for each part of the build.. This opens your contract up to being whatever he says it is.. If you are only in the framing stages I would say you are looking at a lot more in overages.. Especially since you aren't even in the upgrade stage.. That would be interior selections/finishes.. This is where we spent about 90% of our overages..

As far as what to do... This runs into an issue.. First question will be if another contractor wants to take over the job if you decide to fire your current contractor.. Many contractors want nothing to do with a job that is already underway.. If they run into any problems it will be a pain to determine what went wrong and each will blame the other..

In my own contracts I make it very clear that anything to do with basic construction is part of the FIXED price. There is no way I would go back to a client to ask for more money for labor costs associated with excavation, framing, roofing, drywalling, plumbing or electrical rough-ins, etc. - or for basic construction materials such as concrete, wood studs, insulation, vapor barrier, drywall etc. It is the contractor's responsibility to accurately budget for these items up front. If he under-budgeted, that's his problem, not yours.

The only variable component in a contract should be those items or tasks where there are aesthetic or quality considerations - e.g., windows, bathroom fixtures, kitchen cabinets, etc. - which are typically categorized as "Allowances" and which may end up costing more than the allowance estimates, depending on client preferences.

You say your contact has a "fixed price" for things like framing, so how is it even possible to go "over budget"? I think you are being hosed.

This is one of those threads where the poster is using a variety of contractural terms which don't make sense (at least so far). For example, "a fixed price for each area of building broken down in a separate exhibit" (this would be very uncommon in a fixed cost/lump sum construction contract since the expenses for each trade would not matter); "builder gives me all the invoices and then I cut him a check to pay the subs. I also pay for materials up front." (this is commonly done on a time and materials construction or cost plus fee contract); "we have been part of the hiring of subs, however I think the scope of work laid out for the subs doesn't always seem to be correct in the end - which is again leading to overages" (again common to time and materials); "The builder is not taking a mark up on anything. We are paying him a flat fee of $25,000 for his "expertise and advisement" (typical for a cost plus fee contract and also for a project management/construction management contract).

From these comments, it appears the contract is not a fixed cost/lump sum construction contract, which is the only way that the construction cost is set in advance, so long as there are no change orders. The comments, "...we have been part of the hiring of subs, however I think the scope of work laid out for the subs doesn't always seem to be correct in the end - which is again leading to overages..." suggests that the subcontractors are not bidding a fixed cost/lump sum for their work.

It sounds as if the subcontractors are bidding on time and materials basis. Thus, as JDS has already said, "...reviewing subcontractor competitive bids and making the final selections with the advice of the builder...may be the only cost control you have in this arrangement..."

I think you need to cut ties with this builder, and find out what it will actually cost to build this house. Our foundation didn't go $20k over budget, and we had a major change! How could that have been so grossly under budgeted?

Stop. Redo the budget on the outstanding items, and find out if you can afford to finish this house. And find out what this guy is providing for the $25k fee. Because it doesn't seem to be expertise.

Even if your drawings were a complete mess, like ours were, your builder should be able to see that if he's an expert.

Missi, can you tell us what type of construction contract you have? Apologies if it sounded like I thought you were "tricking". This is not the first thread like yours, and usually the problem(s) and solution(s) can be traced back to the contract, rather than anecdotal incidents. Good luck with your project!

Amber - according to the contract the builder is to supply: "Unless otherwise specifically noted, The Builder accepts the relationship of trust and
confidence established between him and the owners by this agreement. The Builder agrees to furnish the skills, judgment, administration and supervision, and to use his best
efforts to provide at all times an adequate supply of workers and materials, and to perform the
work in a most expeditious, economical and workmanlike manner. The work shall be done
substantially in conformance with the plans and specifications that have been initialed or
signed by each party. attached Estimate.
The builder shall procure the necessary permits. Permits to be acquired include, but are not
limited to, temporary toilet, septic permit, water meter, temp to perm electrical permit,
residential construction permit and contractor affidavits from HVAC, Electrical, Plumbing and
Insulation Contractors."

The foundation was dug while we were on vacation and was not in exactly the spot we indicated we wanted the house to be when we left. Builder said we would save money by turning the house - but we bought this piece of property for a view so did not want to have the house turned. We made that very very clear. Foundation had to be re-dug - made ceiling in basement 2 feet higher and garage ended up having to have a 10 foot retaining wall. When we asked what the extra cost would be to move the house we were told $1,500. Stupid us ... didn't get that in writing.

Virgil - From what I can tell the contract is just a standard Residential Construction Agreement. I may have misunderstood this whole process, but the builder sat down with us and went through each line item of pricing to get to a total price we were comfortable enough with to sign the agreement. From what I am rereading in the contract - it looks like a price was decided upon. The estimates are attached in exhibits and all changes and extras are our responsibility. I can't seem to find who is responsible for "mistakes".

I have to admit ... I am losing sleep over this build. I went into it thinking the builder and I were partners - but communication has been sorely lacking.

Thanks all for taking the time to respond. My husband and I have a meeting set up with the builder in the morning to go over budget.

My heart goes out to you and I hope your meeting goes well. I know I would be bonkers building. I am losing it just trying to redo a kitchen!

You may want to have an attorney review the contract and explain it to you so that you are clear on what you are entitled to per the contract. Also, you indicated that you are paying the builder directly and for materials as you go. You may also want to consider using a title company to facilitate the payment process to protect yourself (even with a cash build). Are you collecting lien waivers as you go if you're not using a title company? Good luck.

Ah, the old "relationship of trust " contract. If it is like one offered me, nothing about the contract is "fixed." I am hoping I'm wrong.

Can you hire an attorney to help you understand what this is? It sounds like your exposure is unlimited.

Best of luck.

The foundation was dug while we were on vacation and was not in exactly
the spot we indicated we wanted the house to be when we left. Builder
said we would save money by turning the house - but we bought this piece
of property for a view so did not want to have the house turned. We
made that very very clear. Foundation had to be re-dug - made ceiling
in basement 2 feet higher and garage ended up having to have a 10 foot
retaining wall. When we asked what the extra cost would be to move the
house we were told $1,500. Stupid us ... didn't get that in writing.

You told him up front that you wanted position A ... he decided that position B would be better for you. Not acceptable, and we're not talking about a window that's a size too large or small or a different stain on the hardwood. This is major. This guy may be friendly and confidence-inspiring, but he is either not as competent as he appears, or is is flat-out not your friend.

Yes, you need a lawyer.

We moved into our new build the end of August of this year. If my builder had decided to put my house in a different location, he would have paid every penny to put it where I told him to and then he would have been fired.

Agree with mrspete and zorroslw1, it's not okay to go against your wishes while you're on vacation then charge you for fixing his mistake. Best of luck. Hope you get this resolved in a satisfactory way.

There is no "standard" residential construction agreement. Agreements are all about apportioning risk between the owner and the contractor, with stipulated remedies (if any). You need a competent real estate attorney to advise you based on your contract and current situation. At your meeting with the contractor, take detailed notes. Do not agree to anything, but tell the contractor you will review the discussion points and get back to him. Take your notes to your meeting with your attorney and decide, together, on a strategy going forward that is in your best interest. Good luck with your project.