Advice on scope reductions with evasive contractor
Started by rettops
about 8 years ago
Posts: 3
Member since: Jan 2015
Discussion about
I'm currently in the process of renovating a 1br apartment. It's not a gut renovation. We are doing new floors, new kitchen, new bathroom, and replacing / adding some doors and lighting. I've always gotten along well with my team, which has taken on design/architecture as well as construction. They seem like smart, professional people. At the same time, when it comes to costs I feel they have... [more]
I'm currently in the process of renovating a 1br apartment. It's not a gut renovation. We are doing new floors, new kitchen, new bathroom, and replacing / adding some doors and lighting.
I've always gotten along well with my team, which has taken on design/architecture as well as construction. They seem like smart, professional people.
At the same time, when it comes to costs I feel they have repeatedly been evasive when I've asked for transparency, particularly as the scope of the job has crept down before and after signing the construction contract.
I have signed a construction contract for $175,000, which estimated $115,000 for labor costs including plumbing and electrical. It seemed high, and I should have pushed back more since the job had already shrank in scope from the scope of the estimate (I was going to do a long series of built-ins, which has been scraped, and I had been planning on hardwood flooring, which they talked me out of towards engineered wood flooring due to height concerns. My ceilings are just shy of 8' tall).
Even more concerning, the labor sum was never broken down well, even though I asked for this verbally a couple of times in person: In the contract it is listed as ~30k for electrical and plumbing, and the remainder is a single item for labor.
After I signed the contract, we did discover asbestos in the glue of the floor: This means that we decided to not demolish the existing parquet flooring, and level the underlying concrete as had been the plan, and instead to just add the engineered wood on top of this.
When I asked, they agreed verbally that this change in scope would be a credit. I pressed them again about this in person weeks ago. They seemed a bit evasive, and would not make eye contact, but agreed that scoping that out was something that I "deserved", and they would get that to me.
Construction has not started yet, and I'm now about to press them again in writing to understand the cost impact of choosing to not demolish the floor.
I understand that there is significant overhead to performing a renovation in NYC, and that the whole is greater than the marginal costs of the parts. At the same time, I also feel that I'm in a very weak bargaining position for getting them to give me a fair credit for the labor reduction that this entails: I've unfortunately played my hand pretty poorly by being a nice young guy of some means (not rich) who says "yes" a lot.
I'm also negotiating the materials costs with them which is broken down better than labor but still only by general category.
There are other pieces of scope that I'm ready to reduce from the project out of concern that I'm not getting good value and could see through better on my own. The materials costs have increased in other areas, such as higher end appliances, so I'm trying to get things back towards the contract price. I'd appreciate any advice for approaching those reductions, particularly when it comes to getting a credit for the labor costs that would have been associated with the scope.
If the discussion does not go well, I'm also starting to wonder what my options are if I were to take the plans they've developed to another contractor. I've paid them 10% of the contract cost so far, but that is a cost that I could walk away from if it really feels that trust has disolved.
Thanks in advance for your thoughts.
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Response by Aaron2
about 8 years ago
Posts: 1693
Member since: Mar 2012
On the one hand, the contractor has a signed agreement to provide you a new engineered wood floor laid over a newly level concrete floor. Unless there's an '...unless we find structural or asbestos problems once we start' clause, formally the contractor will have to eat the cost of asbestos abatement. He should have priced the contract so he makes some profit, and maybe has a hedge against the risk of the uncertain, if he can't remove the risk it via the contract ("owner agrees to pay add'l $5,000 if asbestos is found"). So hold him to your new wood floor, as specified in the contract. At the time the contract was signed, it was no longer an estimate but a firm price for a defined scope of work.
On the other hand, it sounds like you've been moving the scope of work and materials around without getting firm agreement on what that means for the cost of the project: "...costs have increased... such as higher end appliances." All of which should have been done before signing the contract. If the contract says they're providing a 4-burner GE stove, and you later verbally agreed that they're now providing a 6-burner Viking, it's a little late to be shocked at what they're charging.
Unless you're significantly experienced in renovation (i.e., done a few of these), it's not worth challenging the labor or materials costs, as you probably don't know where you're getting 'good value', even if you 'know you could get it cheaper somewhere else', except where something substantial has been cut and you already have a fairly detailed breakdown of costs by component (which you said you don't), and you have a contract that permits these sort of scope changes.
At this point, your best bet is to have a meeting with the contractor and review a detailed list of proposed changes, and agree with him the net increase/decrease. Once that's agreed, that's your revised scope of contracted work, and that's what you should hold him to (and he should hold you to).
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Response by 300_mercer
about 8 years ago
Posts: 10540
Member since: Feb 2007
Floor is a small change which is not going to change the cost much. I would not argue about that. Build ins in the other hand are bigger item. You should negotiate some credits which will go towards any additions ansld field conditions you may encounter.
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Response by Primer05
about 8 years ago
Posts: 2103
Member since: Jul 2009
I wish I saw this earlier as you probably have already started your renovation. I think it is a huge mistake to start a project with anyone (architect, designer or contractor) if you are not comfortable with them. The chances are great it will only get worse.
I think the floor is a big deal. There is so much less labor in installing engineered flooring than doing a solid floor where you need to demo, install a subfloor, etc.
You need to get every change order in writing and the parties must agree on it.
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On the one hand, the contractor has a signed agreement to provide you a new engineered wood floor laid over a newly level concrete floor. Unless there's an '...unless we find structural or asbestos problems once we start' clause, formally the contractor will have to eat the cost of asbestos abatement. He should have priced the contract so he makes some profit, and maybe has a hedge against the risk of the uncertain, if he can't remove the risk it via the contract ("owner agrees to pay add'l $5,000 if asbestos is found"). So hold him to your new wood floor, as specified in the contract. At the time the contract was signed, it was no longer an estimate but a firm price for a defined scope of work.
On the other hand, it sounds like you've been moving the scope of work and materials around without getting firm agreement on what that means for the cost of the project: "...costs have increased... such as higher end appliances." All of which should have been done before signing the contract. If the contract says they're providing a 4-burner GE stove, and you later verbally agreed that they're now providing a 6-burner Viking, it's a little late to be shocked at what they're charging.
Unless you're significantly experienced in renovation (i.e., done a few of these), it's not worth challenging the labor or materials costs, as you probably don't know where you're getting 'good value', even if you 'know you could get it cheaper somewhere else', except where something substantial has been cut and you already have a fairly detailed breakdown of costs by component (which you said you don't), and you have a contract that permits these sort of scope changes.
At this point, your best bet is to have a meeting with the contractor and review a detailed list of proposed changes, and agree with him the net increase/decrease. Once that's agreed, that's your revised scope of contracted work, and that's what you should hold him to (and he should hold you to).
Floor is a small change which is not going to change the cost much. I would not argue about that. Build ins in the other hand are bigger item. You should negotiate some credits which will go towards any additions ansld field conditions you may encounter.
I wish I saw this earlier as you probably have already started your renovation. I think it is a huge mistake to start a project with anyone (architect, designer or contractor) if you are not comfortable with them. The chances are great it will only get worse.
I think the floor is a big deal. There is so much less labor in installing engineered flooring than doing a solid floor where you need to demo, install a subfloor, etc.
You need to get every change order in writing and the parties must agree on it.