Contractor recourse
April 10, 2014 6:44 AM   Subscribe

You all were very helpful with my last rennovation issue (which was resolved, thank you). Here is the lastest. Our major house addition/rennovation had several allowances built in, which I believe is normal and makes sense. For example, our electrical allowance was $15,000. The project is now done and my contractor tells me now that we exceeded our allowance by $14,000?!

Of this amount, I understand about $6,000 of it. What I don't undersand is the additional $8,000. I was never given a warning that I was exceeding the budget by this much (in truth, I don't believe that we made any decisions that were remotely outside of what an electrician should have expected for a job like this). So in my mind it was either poor estimating by our contractor, or a money grab for both of them at the end.

My contractor has said I can either pay him, or the electrician directly. (I can't help but think that the contractor will get some either way). to this point we've had a great, trustowrthy relationship with our builder.

What, if any, recourse do I have?

Thank you!
posted by Blackcow167 to Home & Garden (16 answers total) 3 users marked this as a favorite
Do you have an itemized receipt? It's difficult for any of us to know how the budget got exploded without any details. Did you get a signed quote from the contractor beforehand? What does the fine print of the quote say?
posted by Think_Long at 6:51 AM on April 10, 2014

$30k just for electric? What % of the total budget is that?

The GC Should have kept you abreast of this. There should have been change-orders written and new estimates provided. In fact I think the % is so over budget that additional permits and inspections may have been required. If none of that was done alongside the progress of the work, then your contractor owes you a very detailed invoice. I wouldn't do anything until one is provided.
posted by Gungho at 6:54 AM on April 10, 2014 [4 favorites]

What is written in the contract with your contractor?

Pending that information, the electrician will likely put a lien on your property until the work is paid for. Short of a lawsuit to prove you didn't approve any additional charges, this will be a tough battle on your end. Best case scenario, you can prove the contractor was not authorized to make that decision and is responsible for additional costs beyond what you agreed upon. Unfortunately, the electricians only recourse is the lien on your home and will not release that until they are satisfied, by you or the contractor.

Your contractor may very well be a nice guy. And there are usually going to be overages from the estimate. But an error of almost 100% without informing you during the process is unacceptable. I'm not saying you would even win in a legal battle, but this is the reason explicit agreements are written up in advance for dealing with contractors.
posted by shinynewnick at 6:56 AM on April 10, 2014

Response by poster: The total budget from the contractor was $302,600. This included everything accept: appliances, cabinets, built ins, tile, exterior paint, complicated sump system.

there were overages, like the sump system and some excavation work (which is why the exterior paint was taken out of the budget, I'm doing that on my own).

Regardless, it makes the electrical somewhere around 9% of the total work. Plumbing was only $2,500 over the allowance ($20,000).

HVAC came within allowance ($30,000)

Would it be likely that a contractor would get a kick back from a supplier?
posted by Blackcow167 at 7:07 AM on April 10, 2014

Response by poster: ...oh and as of now I don't have an itemized receipt for this mystery $8,000. But indeed I will ask for one.
posted by Blackcow167 at 7:08 AM on April 10, 2014

You can't address this question at all without the itemized receipt. Without that, everyone here (including you) is just guessing.
posted by DarlingBri at 7:14 AM on April 10, 2014 [2 favorites]

Response by poster: Thanks, Darling. It just seems like now it allows the electrician to back into his number and I'll hve less recourse.
posted by Blackcow167 at 7:23 AM on April 10, 2014

No. What you say, in writing (in an email is fine) is "With an overage that almost doubles the electrical budget as estimated, you can understand we'll be querying this. Please provide an itemised bill so we can review the breakdown of charges. Thank you."
posted by DarlingBri at 7:30 AM on April 10, 2014 [6 favorites]

Response by poster: excellent, thank you.
posted by Blackcow167 at 7:33 AM on April 10, 2014

Contractor employee here (and I do a LOT of estimating). No, we don't get kickback from suppliers. Ever. Not sure about other GCs but that's not the way we do things.

However, if we were anticipating that big of an overage on an allowance, we would definitely tell you BEFORE the extra work commenced and all would have to be in agreement before we proceeded. And we would be able to show you where the money went. When we put in allowances, we cite a reasonable amount, which usually results in a credit to the customer.

Double your budget on electrical would only make sense if they allowed for standard items and you chose super expensive, high end fixtures. I'm guessing that isn't the case here. If work was over budget because we underestimated, we would eat that cost and you would never even hear about it.

Something's fishy here.
posted by futureisunwritten at 8:33 AM on April 10, 2014 [8 favorites]

What does the contract say about how overages would be handled? If the work is done, you might take a tougher stance, either now or after asking for more information. For instance, if the contract requires that overages be handled via written change orders, a different email might be "we did not authorize that overage in writing. we had no prior notice and no idea this was occurring. We have not been planning on this addition to the budget and have no funds available for this expense." I'd stop short of saying "we refuse to pay it ever."

Read your contract first. And maybe consider talking to a lawyer to learn any other relevant details. (E.g., if you were in California, I'd ask whether the subcontractor gave you a 20-day notice and if not, whether 20 days have passed since their work commenced. If they did not give you one, and if the 20-day clock has run out for them to do so, then my non-lawyerly understanding is that they would not be able to enforce a mechanics' lien, though they could still cause you hassles by putting one on on your house.)
posted by slidell at 8:37 AM on April 10, 2014

Also hoping that Flood will weigh in here. He gives solid advice in these sorts of threads (and I believe he is also an electrician by trade).
posted by futureisunwritten at 8:39 AM on April 10, 2014 [1 favorite]

This is prime lawyer time. Not to say you need to sue, but you need professional legal advice before you start down the path of what needs to be paid how. You said there were overages on the other items, like the sump, so how was that handled differently than this?
posted by shinynewnick at 9:16 AM on April 10, 2014

Response by poster: I'm going to ask for the itemized list of work. Unfortunately, the contract is very loosly written, with no official language about change orders.

To what futureisunwritten asked about going with high end vs standard things. That is what is hard to grasp, as we bought all out fixtures ourselves. The contract covered rough wiring and of course finish work, but didn't include the fixtures. We used the electricains wire, faceplates, fuse boxes etc, didn't "upgrade" anywhere.

Overages were handled informally, he told me what required more money and why, and in all cases, it made sense and seemed logical to me. I never paid the contractor for overages, always his suppliers directly.
posted by Blackcow167 at 11:07 AM on April 10, 2014

I am an electrician. $30,000 for a single family home is EXCESSIVE - unless you are in New York City, or some other hyper expensive market.

We just completed a project building home that will be televised later this summer on the DIY network - the home was being a made for TV, and thus has EVERYTHING, including power to dock, subpanel in a detached garage, 3 AC systems, electric remote control blinds on every window, a whole-house back-up generator, and much more. We even had to run a dedicated 20A circuit for the master bathroom toilet, because the super fancy toilet does everything, including heated toilet seat. That house was the most intricate and involved single family home I have ever seen. It was an absurdly excessive house, like you would only find on TV. It was a 3,600sq.ft., and our total contract price (with all extras) was around $28,500.

I guess markets are different - but I am in Central Florida, outside Tampa - and this is not the cheapest market in America.

As a general rule of thumb, electrical is 5% of the total price of new home. I know GC's who build homes by pricing out the slab and framing, and then using formulas like that to guestimate the rest. 5% of the total for electrical is pretty normal.

You have 10% of the total for electrical.

As a sub-contractor, I would NEVER NEVER EVER start doing work beyond my allowance price without written approval from the GC and the customer. I would also be documenting ever extra. It is wildly unprofessional to drop this amount of extras on the customer at the end, without any prior written agreement.

You say there is no language about change orders in the contract - if that is the case, then it is controlled by some standard contract form in state law. Loose language in a construction contracts does NOT allow people to interpret meaning after the fact - loose language defaults to some standard law contract for each state. And I guarantee you, what ever the controlling contract law is, change orders in construction contract require written approval. Trust me, I have been there.

This sounds fishy to me.
posted by Flood at 11:51 AM on April 10, 2014 [8 favorites]

Response by poster: Thanks, Flood. Just to clarify, our project is in a high rent town for sure (Boston suburb). But the project itself was fairly typical:

added approx 1,800 sq ft to an existing 1,200 sq ft. house. One room had some in-ceiling and in-wall speakers and the whole house was wired with Cat5 wiring and cable. But that must be pretty standard these days. unfinished basement and a finished attic. 2 full baths and 2 half baths plus a new kitchen.

Appreciate your input.
posted by Blackcow167 at 12:44 PM on April 10, 2014

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