How accurate were your estimates?

[elvee]

Hey guys. As my wife and I are wrapping up our project, our GC is just now letting us know that his estimate wasn't as accurate as I would have likes. My question for everyone on here is how accurate were the estimates you received from your contractors, whether it was a GC, or just subs that you hired on your own?

In the world that I work in, our jobs are all price fixed quotes unless the customer changes the spec on us. The GC for the garage gave us an estimate, but stated that the job would be billed on a cost plus basis, rather than fixed price bid. On some categories his estimate was either spot on or slightly under estimated. Unfortunately, he missed on framing and trim materials by about 80%, concrete and plumbing were off by about 50%, and electrical was off by about 30%. Overall the job is over by about 20-25%. Am I out of line for feeling that this is a bigger than acceptable miss? I couple this problem with the fact that the GC did not keep us up to date on costs through the course of the project, leaving us with a $10,000 surprise when we received what he thought was the final invoice.

Let me know your thoughts on this. I appreciate people's input.

 

[5wndwcpe]

I think the flames are gonna fly on this one, but here's my thoughts. I believe the GC should have been keeping you informed at all times of price differentials (up or down) to avoid this very thing. It may be, however unlikely, that he wasn't keeping track of them as time went on and was waiting for the final tally to see where he was at. Personally, I think 20-25% is out of the question. In my build, I've figured on 10% to allow for price increases/ fuel surcharges and the like. Any more than that and we've got a problem.

 

[Stuart in MN]

The GC for the garage gave us an estimate, but stated that the job would be billed on a cost plus basis, rather than fixed price bid.

If there wasn't a firm price I don't think there's much you can do about it, although he should have kept you up to date on the project status.

The price of electrical and plumbing materials (copper in particular) has been real volatile these days, so the costs could have changed quite a bit between his initial estimate and when he bought the materials.

 

[rodnok1]

wow, I don't think I would have signed without a contract stating a price, you can expect a 10% overage usually. Sounds like he doesn't take the time to actually figure costs or isn't experienced enough to me. I don't know how he could be off 80% on framing...unlesss you wanted something very unusual or architect spec's new tech. IMO he screwed you and anybody else he does this to.

 

[boiler7904]

You should have been kept up to date with the finances of your project from day one but that's water under the bridge so to speak. Demand invoices or receipts for every yard of concrete, 2x4, nail, and any other material purchased for this project. Look for inconsistencies (i.e. 4 windows at $x when you only have 3 and so on). You should also be allowed to look at timecards / payroll information to justify those costs. If he can't justify something with backup documentation, I wouldn't feel obligated to pay for that item. Basically, with a cost plus fee contract, he needs to open the books and justify his invoice.

Depending on your local laws, this may border on fraud or deceptive business practices.

 

[bluesman2a]

Elvee,

I feel for you. I had much the same issue with my 1st contractor, but I was catching it on a daily basis. That still didn't save me on my wall debacle, but I feel like I got the wall I paid for.

I think other than examining the books, your current situation is water under the bridge unless you can find inconsistencies like Boiler mentioned.

Personally, locally here in Atlanta I would plan for 10% over. Heck, tell him you think the whole thing unjustifiable, and offer to split it with him and see what he says. EVERYthing in construction is negotiable, and these guys locally are HUNGRY.

Also FYI, my SECOND contractor wrote me a bid on my build and he brought it in TO THE PENNY. The only exceptions were the changes *I* mandated, those were costed before work was done and I signed a change order along with the builder. BTW, if you need a reference for more work, I'll be happy to provide references and contact info for him, we were extremely pleased.

Again, sorry you had problems...

 

[sctattooer]

I told my contractor what I had to spend from the beginning, with no room for adjustment. There was a couple minor things I had to do myself when he got done, but it worked out right at budget.

 

[jklingel]

IMO you got burned, but the contract you signed left you open to that possibility. I think you are rather obligated to pay up, but I sure would demand to see the books and I'd certainly stall on paying him for a little bit, to give time to look at your options. Is there any kind of arbitrator that could step in here? That is a HUGE over-run, I think. Damn near criminal. Good luck, and I hope the guy/gal is really "good folks" and things just did not go as planned.

 

[Dustoff 35]

The CG's job is to manage the project. That includes raw materials, subs, time and budget. He gets paid a premium to do this. In a cost-plus scenario, his responsibility for budget management kind of goes out the window doesn't it? If his fee is a percentage of the total cost, bugetary overruns, like the framing, actually increases his bottom line!

I worked on a large construction project in Wyoming when I was in college. It was cost-plus also but the customer was Exxon and they were willing to pay whatever it took to get the natural gas dehydration plant up and running. The waste of materials and time and by the subcontractors was unbelieveable. Cost-plus is a bad deal, for the customer.

My garage build has been running about 10% over budget but then I am not a professional builder, just a guy hiring subs to do the work. Most of my overages have been self-inflicted by choosing to upgrade items as we go along or items I missed and didn't budget for due to inexperience. I think your framing overage is way out of line. Quote (and I do mean quote, not estimate) to trigger pull on my framing was a 6 month spread and I got the original quote price, labor and materials. Materials may have gone up but in many areas of the country, building activity has gone down. This should offset.

I would immediately schedule an emergency meeting with your GC and do a budget shakedown. A real financial strip-search. Ask to see materials take-offs from the prints, match it all up with invoices, timesheets etc. At this point, you may have to step in and be more hands-on in order to keep costs under control. And please, NEVER enter a cost-plus contract again.

I apologize if I am too blunt, I just hate to see anyone get screwed.

 

[dipper]

The lumber for my build was originally quoted a few months before I actually started building, but the prices were still accurate when I had the lumber delivered. The only thing I went over on from my original estimate was just extra framing lumber and plywood, all in all it was only a few hundred extra.

I had a quote for my slab removal, footer & block foundation and concrete flat work and I paid just about exactly what he quoted. The only extras that he didn't have included in his quote was some rebar for the wall (which we didn't think would be required; but it was) and about 15 or 20 bags of concrete to fill in the holes that had the rebar in them. That was a few hundred more than he quoted, but not bad at all.

 

[toxicz28]

Sounds like he doesn't take the time to actually figure costs or isn't experienced enough to me. I don't know how he could be off 80% on framing...

You are talking about materials that are commodities. Plywood, framing lumber, drywall, and copper are all traded on the commodities exchange, so their price fluctuates. It *****, but that's the way it is. Unfortunately, the OP signed a cost plus contract.

 

[logical]

I just GC'd my house...so I have a little experience here on what can happen, but of course I have nobody to blame. My lumber was way up because between quoting and buying the lumber shot up in price...not much I could do. Now if your framing was way off for that kind of reason then that's one thing. If it is way off because your GC "guessed" wrong at how many studs you needed, then you have a right to be mad but sounds like you have a contract that says "opps, tough luck".

Brick: I underestimated how many bricks I needed by not considering how far up out of the ground my ranch house was pushed to get the basement floor up to exist walkout area grade...my fault. So, an extra 3000 bricks plus 3000 times the cost to lay them added an unexpected $6000. There went my super-powerful automatic standby generator.

The point is, it depends on the "why", the actual reason his estimate was off. The big risk in a cost plus arrangement is that unless you are deeply involved, the guy has very little incentive to get it done cheaply. In the very worst extream, it opens up the possibility of kickbacks. (Cement guy charges $2000 extra and shuttles $1500 of it back to CG). I suspect you have learned just why your guy only wanted the job as cost plus.

 

[elvee]

Just to give a bit more insite - this builder has been in business for himself for about ten years, and came highly recommended from several people that I knew before I contacted him. Just before our garage, they had built a similar two story garage in another part of town. He has stated in person and in emails that he was remiss in keeping us up to date on costs. He also admits that he completely bid the framing package wrong, and that he didn't do a very good job overall with his preproduction work.

I now have all the receipts he has listed on the bill, and I have gone through them line by line, and I have found a number of errors - stuff for other jobs that got picked up at the same time, materials that were wrong and sent back, etc. As the building did indeed take X amount of materials to build, and there were crews here working ( I work at home, so I know when they were and werent' here), I can deal with paying for the materials. I just have a huge problem paying his overhead percentage which is charged for managing the job, when he didn't manage it. I'll pay him his cut on the areas that were right - painting, insulation, etc. At my job, I don't get a commission check for a job I misprice - those actually cost me money. I really have a problem not applying the same logic here.

So, am I off base?

 

[PAToyota]

I'd sit down with him and go over it. The fact that he gave you the receipts and admitted about things being wrong tells me he is willing to negotiate. I wouldn't just cut him a check for what you feel is right. I'd sit down, go over the mistakes, go over what you feel is fair, and ask him for his input. Not saying you should let him screw you over. Just that there are fewer ruffled feathers if you work it out together and that usually helps in the long run.

 

[dashboard]

Just what we signed the contract for, not one penny more, and we had some major issues during const.

 

[Kevin54]

now have all the receipts he has listed on the bill, and I have gone through them line by line, and I have found a number of errors - stuff for other jobs that got picked up at the same time, materials that were wrong and sent back, etc.

It sounds to me like he has a lot to learn in the way of bookeeping. I second for sitting down with him and pointing out all the discrepencies. If worse comes to worse, you may have to split the mistake of him not pricing thing right. Does any estimate give a standard 10-15% flutuation that the estimate may change by? The normal is that if it goes over say 10% then you have to be notified in writing of cost changes. But theere is no way I would pay 25% or more difference after things are over and done with. If he made the mistakes in calculating then he should eat the majority of the cost. But then again, if you would have to get a lawyer you could eat up quite a bit there, not counting the headache that you would have to go thru. Maybe after you set him down and go over things he may change things more to your liking. But then again, if he really insist on you paing 25% more, I would suggest splitting it and only go 12% difference.

Kevin

 

[logical]

I do know the real lesson for everyone here is this:

"Cost plus" or "time and materials" is for super custom home builds or high-end classic car restoration or maybe unique garage builds where excavation unknowns (will they hit water or bedrock) or well drilling....not for straight forward well-defined garage or house builds.

 

[mritech1]

I had a guy come out to do some excavation, he bid the job at 15oo.oo. I said go for it, when he was done he sent me a bill for 2800.00......... I kinda blew up on him and said fine I'll half the difference with you but I am not paying the higher figure, you missed the bid by 50%. He agreed and accepted my offer. I am not sure what he could have done if I didn't pay...put a lein on the property etc?. but end result was he would be short any cash for the work he did in the immediate future. Might be worth trying to negotiate with them is my point.

 

[dawg]

framing and trim over 80%!
damn thats unheard of!
I can see a 20% max but those guys should know the ropes enough to get you within 20%.
personally I think you been had.
I built my house years ago (myself and my freinds which are all contractors)
and they never got the overall price difference by 5%.
Im betting the contractor is planning a nice vacation this year.

 

[6768rogues]

On time and on budget, signs of a good contractor or project manager. He missed the budget thing, how did he do with the schedule?
I would be upset with that large an overrun without some information along the way. He should have run an estimate; I would ask to see the itemized estimate compared to actual costs, on an item by item basis. If all is true, I would reluctantly pay because I would have what I am paying for. I would not recommend him to others, because a good contractor knows how to estimate and knows how to communicate if things go wrong.

 

[Wilbur]

I am with everyone who has said the overages are WAY out of line. I do think the fact he gave you the reciepts is a good thing and shows he may be willing to negotiate. Obviously you won't have to pay for materials for other jobs or incorrect ones that were returned. But I agree with the sentiments posted by some that you pay a premium for him being the GC to manage things properly....what has he done properly? I would say that I would be willing to pay his higher fee for the parts of the project that were done correctly. I would also be willing to pay for material fluctuations due to commodity price changes- he doesn't control that. But for the items he screwed up on I would not be willing to pay a dime. And an 80% miss on framing is just unexcusable. Flat out. So I would go through line by line and pay him what he "earned" but nothing more. But as I said, the fact he gave you all the receipts suggests he is willing to talk which I think is a good sign. Good luck.

Certainly sends a message on "cost plus" jobs though doesn't it.

 

[1991Syclone]

Certainly sends a message on "cost plus" jobs though doesn't it.

Yes it does. It sends the message that on a cost plus job YOU as the customer need to stay on top of things. Constantly asking for receipts, looking for mistakes (either accidental or intentional) and generally paying attention to what you are being billed for and what is being built. I can guarantee you that there are clients who have worked with GC's on cost plus jobs that are happy with the results.

As for the situation at hand, look over the contract you signed and see what it says. Telling your GC that you're only going to pay for what you feel you should pay for it not a step in the right direction. Should your GC feel like he's getting the short end of the stick, he can hold up your entire building. He can put a lien on it and the chance of you getting a CO at the end are not very good.

I do believe that an overage of 80% is unacceptable and the rest of his estimating is too far off to let it slide. If all else fails, get some legal advice. I'm not saying to start filing lawsuits, but see where you stand legally before you do something you might regret as finding a new GC to take over leads to the question of who is legally responsible for what when it comes time to warranty or required repairs/changes.

 

[russlaferrera]

IMO most contracts state a cost and a time period they will be honored 30, 60, 90 days. What was your period? What is the cost per sq. foot? Is his estimate close?

The GC failed to do a proper estimate. He should pay for any overages in materials. He should pay for his poor estimate for sub contractors used in building the garage.

You should pay for any increase in material and/or labor cost, ie cost of wood, sheetrock etc. going up in price (due to inflation or high demand) and labor, (should the rate changed), and any unknown problems he had no way of knowing.

I am sure there is middle ground all can agree on. IMO the middle should be more on your side. Remember figures lie, liers figure

 

[elvee]

Thank you all for your thoughts and views. Wilbur is pretty much on track with our thinking. We can't dispute that X amount of materials did indeed go into the building (BTW - we have had our final inspection and CO is being finalized by the county). In a legal sense, we can't argue that we didn't receive the materials, so we are somewhat stuck with paying for them. We have a meeting scheduled for Saturday with the GC, the project manager who was on site, my wife and me. Our thoughts right now are that he doesn't get his managing percentage on the areas that he didn't handle well. I have at least two emails from him where he plainly states that he did not do his job properly as we were not kept up to date on costs, and that he did indeed completely botch the estimate. So, if it gets ugly, I already have how own words to use against him.

I will post up once I know the outcome.

 

[elvee]

So we sat down with the contractors on Saturday, and came to an understanding. Basically, we split the difference between their final invoice, and what we felt was fair. I think that is about the best we could have reasonably expected to have happen.

Thanks to the folks who offered up opinions and advice.

Elmer