What type of contract do you have - cost plus or something else?

What does your contract say, if anything, about those specifications? How detailed was the itemization for the renovation?

What were the discussions between the architect and the builder for those areas that required additional site coordination. Presumably you would have been involved in those discussions too.

Hi! The contract doesn't specify whether it's "cost plus" - it does included a list of work to be performed "as stated on prints" with some itemization, (e.g. framing & roofing, plumbing, electrical, interior and exterior trims and finishes, insulation, doors, windows, kitchen cabinets and countertops, exterior stairs and decking), for one total sum price. Does that info help clarify what kind of contract?

Based on your answer, it sounds like the contract is vague with few itemization's. Is the renovation completed now and there is a residual invoice the builder wants paid or are you still in the middle of this addition?

The note isn't completely clear, but it suggests that before some work is started there should be a discussion with the architect.

Depending on the type of construction contract you have the cost of that work could be included (a fixed price contract) or not included (time and materials contract) or (cost plus contract).

Are you saying the contractor didn't include anything in his quote for that particular work? If so, it sounds like either a cost plus or time and materials contract.

Always interesting when consumers post and don't know or understand the type of construction contract they have, and the applicable terms and conditions.

Naturally the cost should have been in the contract, if known. However, the whole reason for the notation was so that the builder and architect and homeowner could consult together to come up with the site appropriate solution and the cost of that solution prior to signing any contract. Did that conversation occur? If it did, then it should have been memorialized as an addendum/change order to the contract.

If you are in the middle of this reno, now is the time to address all of these site specific coordination issues with the builder and the architect and make the appropriate addenda.

If you are finished with the reno, I don't see how you can hold the builder responsible for improvements to your house that he made over and above the contract. JMO. I don't have the contract to see (and I'm not an attorney) or enough info to tell you what to do or not do. IF I were in your shoes, I would start by going over each and every expense for the entire job to make sure they are valid/legitimate expenses and go from there.

Hi there, to answer Denita - we are in the middle of the construction yes. And in response to both Denita and Virgil, we basically have arrived at a point where we were finally able to address the portion of construction where a basement wall needed to be opened to create a larger room. The opening width was spec'ed on the prints with the note "Site coordinate with Architect". We were finally able to get the architect, the contractor and myself to meet together on site to discuss what would be necessary to remove the portion of existing wall and stay 1) structurally safe, and 2)pass building code. Structurally safe was not an issue, but passing building code is going to require the contractor to set a new header flush mounted into existing overhead floor joists to ensure the header is at 7' height (the existing old header for the wall is around 6'4" and will not pass code once we change the existing doorway to the wider opening. Completely doable, but an amount of work not anticipated by the contractor, who did not consider any code for header heights when making the bid.

And yes - now in the middle of this project - in hindsight, the contract is way too vague. We as the homeowners spent almost 2 years trying to find a contractor and were probably too anxious to get started when we found someone we liked and could afford. Learning a lesson the hard way, and trying to do damage control. At the moment we are much further ahead in payment than the work that's been done and trying to limit the amounts get tacked on.

He is a GC (actually two partners, who took on a 3rd person shortly after we signed our contract). When I did finally get the GC and architect to set up a meeting to discuss this portion of the construction (well after work on the rest of the project had commenced), I did call out that some kind of monetary amount should have been factored in for this particular part and included in the agreed on final number for the whole project, with the understanding that if there was some added unknown to the scope of work, that we as the homeowners would of course pay the extra cost. But we shouldn't get charged for the whole thing from scratch. Unfortunately that meeting and discussion didn't happen until 5 months into the project (btw, this is a project that was estimated to take 4-5 months to complete, and we are now past the 5th month and looking at at least a couple more months even if everything goes smoothly). And yep, another bad on us, we signed the contract even though the GCs "forgot" to provide us with a written schedule/completion date but we signed anyway bc they assured us they would provide it as soon as possible. That was five months ago and still no schedule/completion date despite repeated asking. Unfortunately our initial trusting natures and "good faith" way of normally going about things now looks in hindsight like naive stupidity.

There's more going on that is making us this trepidatious on this situation (like a couple of change orders that came in at double to triple the customary rate to do the work being asked), but as I said, we're becoming painfully aware of not having a more air-tight contract to start with and now just trying to do some fair-handed damage control. Thanks btw, for all comments offered so far!

So which type of contract do you have: 1) Fixed cost; 2) Cost plus; 3) Time and materials; 4) Something else?

And what does your contract say to define a change order and how the costs of a change order are computed?

It makes a huge difference.

Hi Virgil - I would guess it is a fixed cost contract - it really doesn't specify, and it was only ever presented as an "all-in" price (although we fully expected any changes that we asked for would be extra cost to us). It's mainly just a contract saying the work will be performed according to the architect's plans, and then a list of about 14 line items (it included framing & roofing, plumbing, electrical, all interior and exterior finishes, insulation, doors, windows, kitchen cabinets and countertops, flooring, and exterior stairs and decking). It also had a couple paragraphs about protecting existing structure so as not to be affected by new construction, and cleanup at end. Then a payment schedule. That's about it. Again, on hindsight, woefully short on detail, and as you may imagine, opening us up to other sticking points along the way. We're also very behind schedule and never received a timeline or completion date despite repeated assurances that we would have one by now.

Unknowns by their very nature can not have a cost associated with them. They are known change orders, but with an open ended amount. Any item on your plans that is not specified 100% is an unknown. Some items can have an allowance associated with them. An allowance is just a guess. Like a 2K flooring allowance for the basement. That will cover carpet. Just not great carpet. But the exact carpet is an unknown. The known is that you’re gonna need flooring. So let’s guess on that.

But construction items that are behind walls, or ceilings, or underground, are truly unknowns and will be charged at the cost for the agreed upon approach. Until the unknown becomes known, an approach cannot be guessed at with any accuracy. It could be a $39 solution, or a $3900 solution, or it could be $39,000.

This is why you need a healthy contingency budget. The older the house, or the more involved the project, the more money you need in reserve,

Hi Sophie, thanks for taking the time in your response.

Although I agree that a truly "hidden" or "changed" condition (what you're referring to as an unknown) that couldn't be anticipated by an experienced contractor is on us to pay for (and in fact we did run into a separate issue that was hidden to all of us, for which we paid extra with our planned contingency with no qualm whatsoever), it is our understanding that a condition that is visible to the contractor from day one (aka our existing wall header that was too low to pass ceiling code once the wall was modified) should have been accounted for to some degree in the original bid.

In fact, another site had what we thought was a reasonable explanation of the difference here - read this on "Hidden or Changed Conditions" in buildingadvisor.com:

"Hidden or Changed Conditions"

This explanation above basically puts the responsibility on the owner if the condition was hidden from the contractor's view but the owner was aware of it (or if the condition was hidden to everyone and there was no reasonable way to anticipate it), but puts the responsibility on the contractor if it's something they should have seen and anticipated as the experienced professional when they did the walk-through.

In our situation the condition was not only visible at the walk-through, but was discussed as part of the project, hence our assumption that some, even if not all, of the expense, should have been in the total quote to begin with. Our architect was also of the opinion that a GC should have either added something to the original quote to cover, or been more explicit at the outset that that part of the project would be an added cost once we got to it (for whatever that's worth).

At this point, we just want the project to continue smoothly but don't feel we should be held responsible for the full bang for something that was in plain sight during the walk-through/bidding process, just because it was easier to "kick it down the road" than figure out at the start. And being home construction novices, we had no idea the implications of waiting until we arrived at this point of the project to deal with it, otherwise we would have certainly met it head on much earlier.

At any rate, we are certainly paying the price for not having pushed harder for more detail in the contract up front...we relied to much on having gotten a good feeling from the original two members of the GC team, and let slide details that we should have insisted on from the beginning before the contract was signed.

"At this point, we just want the project to continue smoothly but don't feel we should be held responsible for the full bang for something that was in plain sight during the walk-through/bidding process,"

But you didn't call them on it then, so unfortunately they got you. Thats why the verbage in the contract needs to be vetted to insure BOTH parties. The only thing you can do know is try to negioate it with them, remember however if you beat them up for 10 bucks here they will get it back somewhere else.

I don't get the logic here. You have a right to be disappointed that this cost wasn't explained to you earlier but why should the contractor pay for work on your house for your benefit? Whether the contractor told you the first time they walked in the house or when they got to that part of the work, someone is still going to have to pay for the work.

"...Hi Virgil - I would guess it is a fixed cost contract - it really doesn't specify, and it was only ever presented as an "all-in" price (although we fully expected any changes that we asked for would be extra cost to us). It's mainly just a contract saying the work will be performed according to the architect's plans, and then a list of about 14 line items..."

The very important lesson here, for every consumer ever thinking of designing and building a new house of any kind and quality level, is to understand the various categories of construction contracts. In particular, understand the type of contract pertaining to one's specific project, together with the definition of allowances and change orders, plus how expenses will be calculated for these two important conditions.

Amazing that folks will make the largest purchase of their lives and not understand the terms and conditions of the contract.

Without knowing the terms and conditions of the OP 's contract there's not much any of us can do in the way of constructive advice...

The logic is based in the very salient point that Alison makes above about the relationship between contractor (who is the expert) and the homeowner (who doesn't have the experience to know what the unforeseen issues might be) being imbalanced from the start. The article I linked to in my last post above also makes that case; that a contractor with experience should be able to look at a site and be able to anticipate at least where potential problems might be and point them out.

That said, as I've mentioned in previous posts, we do expect to pay something for this development, but as the contractor is the more experienced party in this situation, we do feel they dropped the ball a bit and should have calculated some monetary consideration into the total quote from the beginning, and not try to hit us with the entire cost. Part of being a professional at what you do (particularly I would think, a General Contractor) is being able to inform and guide a non-housing professional homeowner on issues that there is no reasonable expectation that they could anticipate, so there aren't unpleasant surprises later. At least in the fields we work in, this is a minimum expectation in dealing with a client; it's why you're paying a professional, not just to get the job done, but to apply professional experience to help the job get done smoothly with a minimum of surprises.

There seem to be a lot of professionals on this forum who hopefully can remember to put themselves in the shoes of the non-professionals, many of whom for which this is a brand new experience.

Hi Virgil -

Yes hindsight is now 20/20 for us re: construction contracts. However it's hard for a non-professional homebuilder client to question something that has been omitted - it's just not there to question!

We now see that the contract we signed (which was quite similar to most of the quotes we looked at - perhaps 5 or 6 in all for this project) just didn't have enough detail in it - by far.

We have certainly learned a lesson and could absolutely give better advice to future homeowners looking to do a similar project, but now just trying to move forward in a fair an even-handed way with our contractor, who we are also realizing lacked the experience necessary to consider these details as well.

"...It’s is simply impossible for the average homeowner to know it all and yet we are constantly being told we should..."

Yes, this is true and we see it here in post after post.

It's one of the reasons why the professionals here tend to recommend that consumers use design professionals to guide and represent the interests of the consumers.

And then, the professionals get dinged in post after post for always recommending the use of a professional...

When the plans plainly say that to coordinate with the architect, there is no way to know what any price might be. Hopefully, several solutions and their tradeoffs are discussed in the meeting.

If I had seen “Site Coordinate with Architect” on my plans, it would never in a million years have crossed my mind that that particular part of the project was completely left out of the budget for consideration later. Never. I would have thought that meant it was just a simple matter of a design decision....or a tweak to be decided upon. At the very least, if it was not budgeted into the quote, the builder had the responsibility to arrange that 3 way meeting before asking the homeowner to sign anything. Someone had the responsibility to inform the homeowner that it was not included in the quote/budget. How in the world would they be expected to know that without being told?

I certainly agree that this is a highly frustrating situation. I understand the OP to say that the construction contract is an "all in" contract, which I would interpret to be a Fixed Price contract. IOW, the contract price is for all work shown on the drawings and specifications.

If my assumption is correct, I would expect the contractor to have included all work in his quotation, plus a contingency to account for unexpected events.

For a couple of areas of work to be noted "confer with architect" I would assume that the issue was a simple one, which could be resolved in a variety of ways, the notation was for the purpose of discussing which construction method was to be used.

To resolve this, a sit-down, calm discussion in needed involving all parties.

Hope that this can be reasonably resolved.

GC should have clarified with Architect up front and indicated on contract what amount he factored in for the line item with a note "final amount subject to change pending direction from Architect."

Frequently as a construction project continues, there is a concern of 'scope creep' on the GC's part and 'cost creep' on the customer's part. In my experience, the cost of change orders has always exceeded my expectations. It might not be fair, but sometimes it feels like the GC tries to improve his profit margins on the change orders.

You guys are going about this all wrong. How much is the change order and how much is the total cost of the job. If the amount is not that big then pay it and move on. If you don't pay it and you have additional changes not included later then the contractor will recoup that easily in cost of new change orders. Most plans are not detailed enough to cover the clients in cases like this. Plans look good, but are usually only enough to secure a building permit. When you get a bid from 3-4 contractors that is why the cost can vary greatly. If you have the means to spend a lot for plans then you get all details spelled out and a book of specifications on framing material, windows, doors hardware, fixtures etc. With these plans contractors have all the information with the exception of hidden items or unknown problems. Your goal is to talk it through and keep a good relationship with your contractor and him with you. You will get a better job. I have been doing this for 40 years. An old Italian builder once told me you can wipe your ass with a contract. No one wins so work it out.