Do you have any of the requests for budget statuses in writing? Do you have an itemized list? I've been in a similar situation and it's common and frustrating. Depending on if you have confirmation that you are on target on a certain date, I would negotiate down and away any work that was done prior to that date. I would also ensure that you are only paying real overages and not markup on them due to the communication issue.

Much also may depend on if this is a custom, semi custom or tract home (which usually drive contractual differences)

You should also read your contract on overages, and depending on several factors (like your overall ability and willingness to pay) consult a CONSTRUCTION attorney for advice. NOT TO SUE and NOT TO THREATEN - don't even USE the word lawyer - more like a background legal coach. They've seen it all and can help you with a strategy depending on your desired outcome.

What type of contract?

The term "Budget" suggests it was a Cost of the Work Plus a Fee contract in which case you should have seen the itemized costs compared to the budget line items with every payment request

If it was a Fixed Price contract you would have received a change proposal for any change in scope or buy out of an allowance and the contract price would have been modified before the work proceeded.

If you didn't have professional representation during construction you were responsible for managing these issues yourself.

When you asked about costs did you do it in writing and were you asking the General Contractor?

Thank you all - yes it was Cost of the Work Plus a Fee and the invoices sort of lined up with the original tick sheet but there was no way to tell what percent of the estimate each actual number made up.

I asked the GC and project manager on site for the numbers and after the "final invoice" I'm still getting invoices. I asked some of the times in writing and they would either ignore it or send me a picture of a list of invoice totals.

Charles Ross Homes those are great tips

The contractor should have provide you with a spreadsheet showing how much of each line time had been done and the current cost.

Its amazing what contractors expect an owner to put up with.

For the above project there was a Guaranteed Maximum Price but at completion it was 10% under the GMP.

This is so frustrating! What does your contract say about frequenting it invoicing and transparency?

@RES,

I don't think it's typically a question of what builders think they can get away with, but rather, a question of limited competencies that the builder and/or their team have. When you consider that some builders are ones who have grown up through the trades they may be equipped with good trade skills, but don't have much in the way of project management, administrative or accounting skills. Other builders may have come from a commercial contracting or engineering background which equipped them with project management skills, but they may not know how to swing a hammer. Others may bring some general management experience and not much else. Some may even equipped with design competencies. Larger builders with staff will generally have a broader range of competencies.

When choosing a builder, homeowners will be well served to assess the competencies of the builder's team (if he/she has one) vis a vis what's important to them during their build. If the builder is an army of one, he/she will need to be good at wearing a lot of different hats. Take the time to to look under those hats and ensure they're not "all hat and no cattle."

I don't know why a homeowner would sign a contract with no limit on the cost of the work and not expect the contractor to track the costs vs the budget monthly.

Just to be clear, even in a cost of the work plus contract your contractor has a duty to respond appropriately to cost questions. A contractor can't tell you that you are on budget an then hit you with a big overage in the end. I can look for the case that set that precedent if you want, I have linked it a few times.

If you have it in writing that he said you were on target then great, but if it is not in writing then all is not lost. Compose an email and note those conversations as being part of your concern. Something like, "we had conversations on several occasions including as recently as X about being on target for cost. Now we are 18% over budget and I am struggling to understand the reason why. Please advise why costs have increased so rapidly." His acceptance of your description will work as evidence.

-----

Now for the reality. Getting some good information to help you negotiate is a great idea, but I caution against getting too wrapped up pursuing this. You might be right but the real question is how much money are you going to have to spend before the builder agrees that you are right?

Good luck

RES I don’t think any hoe owner would ever knowingly do that but I suspect people make a ton of assumptions about how plentiful the info will be and don’t actually ask.

In our contract it said builder would use builder trend and also would give us invoices every two weeks which were original invoices plus their labour costs.

But we had no idea what that would actually look like. It wasn’t until we asked I’d they had a document that tracked progress to date vs budget and what not that we got that spreadsheet. It was at our asking we were given it only.

Worked out in our favour that they were doing it and happily shared. I know others who hate hot had same experiences

To be sure, homeowners need to perform due diligence prior to contract. One dimension of that is to have the builder's proposed contract reviewed by an attorney familiar with residential construction and the applicable regulations. If the builder's proposed contract lacks something or needs clarification, the attorney has the opportunity to flag those and suggest appropriate language to help protect their client. In the case of a cost-plus contract, I would want reporting and invoicing procedures spelled out to well, get everyone on the same page.

Its a rare lawyer who is familiar with good management procedures for a Cost of the Work contract. Much of that information belongs in Division 1 of the Specifications which would be referenced in the Agreement.

That's a good pitch for plans to be produced by an architect, but lots of homes get designed and built without architects and without detailed specifications.

My point is that attorneys have a role in protecting clients in any contract arrangement including a cost-plus arrangement. If that requires an understanding of contract administration, the attorney needs to be equipped with that; otherwise, they should refer the client to someone who has the requisite expertise.

I doubt my builder would have taken kindly to an architect setting out the terms of his contract. I know we’ve run in circles on this topic in the other thread but I’m very happy we didn’t use and architect and have them lead the show. We live in Canada and used a designer, there are more requirements for the title here than the us I believe, and the designer and builder worked together from day one but each had their own distinct contract. The designers contract for architectural drawings and interior design was super different than the builders. Both were checked by a lawyer and neither referenced how we would see big picture budget progress but only transparency of invoicing. No one caught this as an issue. Luckily it wasn’t one as our builder was transparent and shared info with us.

So is your answer "YES "to the OP who is 18% over the budget with no warning and is asking "Is this just the way it goes?"

Nothing I've recommended requires an architect.

If you are speaking to me RES my answer is no this is not just the way it goes. I agree with bry that in a cost or work plus contract your contractor has a duty to respond appropriately to cost questions.

In our case a few months into the build, while still receiving all invoices, we realized we needed the bigger picture document to assess how on track we were compared to overall budget. Our builder gave us this fluid document and it helped shape many decisions as we moved forward to keep us on track. We had two overages on our build that were for the most part not predictable or avoidable. Foundation related costs were more due to unexpected drainage issues and framing went up due to lumber tariffs hitting us hard. We worked with the builder to mitigate these costs because we had an open communication line.

We ultimately were 10% over on the whole build which is within the range we anticipated we would be.

bry911 had an excellent suggestion of how to handle this, and also a very important point at the end about how things are likely to end with your GC, and how much you might have to spend.

Do be firm about having him show how costs are now 18% above when he was saying you were on track. You might be able to come to some agreement about some of that overage. Maybe, but don't get your hopes up..

If it's any consolation, we began our build with the most specific set of cost estimates that we could get our GC to come up with. The GC sends us draw requests about every two weeks, which include each invoice that we're paying on that invoice. My spouse is amazingly detail-oriented and tracked every single payment; he noticed a number of oversights or errors on the part of the GC or the applicable sub, which were then fixed. Even with all that, we still ended up over the amount we intended to spend. (Partly due to unforeseen issues, a couple of mistakes, and only one or two changes that we decided to make that increased the price of something.)

15-20% over is common.

Doesn’t mean it should be accepted when the home owner asked for budget updates regularly and is owed them in their contract. Just because it is common doesn’t make it okay

Never said it was ok, and said nothing about updates. The reasons for going over are numerous.

Nothing to see here... move along.

Very good information