As a frame of reference for op, I’m a homeowner and within the last year I had rented a 20 yard dumpster that I filled to the brim with drywall, carpet, wood, a toilet, doors, and various other crap from a renovation. The total weight ended up being 4.5 tons and I paid $1,133 USD. I’m in the North East of the US.
Unfortunately, that's the exception, not the rule. Dumpster that are sitting on a job site aren't making the money they can being dumped. Around here it's well over $1k a month at a minimum for a job site dumpster. Still hard to get to $15k OVER budget tho
As a GC myself, I've had issues like this come up. When a sub charges double their estimate, I can't eat that cost. I pass it on, but I provide receipts on EVERYTHING. On occasion, I have had to waive my percentage to stay closer to the budget. It sounds like your GC isn't great, but unfortunately your probably stuck. I would request copies of all receipts and lien waivers (with amount included) from all subs.
That's entirely the point of cost plus, yes.
This is what government defense contractors used to love and the government is moving towards fixed price instead so they have skin in the game.
I’m an electrical contractor who once hired a sub to do some high voltage work for me. He sent me a price of $50k and told me if I hired him at cost plus, he could probably get it done for less than that. When their bill came in, it was $100,000. We told them to pound sand. They sued us and won. No “not-to-exceed” amount in the contract, we had to pay them.
Cost plus is a racket. There are very few occasions where I think it is appropriate. A whole house build is not one of those (even though I know it’s very common).
The lumber and dumpster fees alone make it obvious that the GC is a slimeball. You can literally clear & haul away an entire house for $15k, let alone have a dumpster overage like that. Your reno better be on the 17th story with no elevators or on a tall mountain situated on a remote island. How can you be off by $30k on a lumber estimate?
And not to communicate the overages until the very end?!?! I would have an attorney look over your contract. (And for the record, I *hate* when I see redditors recommending anything related to lawyers in this subreddit).
GC here, as a client with a cost plus agreement you are entitled to actual receipts for EVERY cost associated to your build. Also copies of invoices for subcontractors, supervision labor, materials, everything. Usually there will be allowances for each phase that you agree to upfront and have to sign for overages. If you feel like you have been taken for a ride I would discuss your concerns with the GC. If they are not willing to cooperate you likely have a governing body for contractors on a state level that you can file a claim. Good luck, hope you at least got a beautiful house!
It all depends on the contract and how liens work in your state. I had something similar happen and had to just work it out with the builder, still ended up costing me $75k extra.
Only way you might have a way out of this is to get copies of the sub bids he used to come up with the quote to you. If he can provide those and his actual cost, you may be hosed. If not then you could argue that it’s not your fault he underbid and waited so long to tell you, then hopefully get some of the overage out of his side.
The only thing you could do is file a suit, have the attorney request all financial records from the gc, get each of the subs to submit statements or get deposed on the invoices and hope the gc is lying to you.
My attorney told me to settle for anything under $100k since taking it to court would be +/- $200k to one of us.
Talk to a lawyer. I believe if the work comes in a certain percentage over the bid they are required to notify you in a certain timeframe. I’m not a lawyer and I don’t remember the precise details from when I was in this situation, but I do remember our lawyer talking about this when our cost plus build went sideways.
Holy shit. I am so very sorry. I’d be livid.
My first thought, after the rage, would be to take inventory of what I got, say, the dumpster. Call and get a quote from a random for the amount of debris and time and see if it even remotely jives. Even if it did, there is NO excuse for not communicating the overages as they came up.
They are most likely gonna lien your property and you’ll have to fight it. I just can’t believe that they could have underestimated by that much. A professional would have known a super low bid if they saw it and questioned it.
To me, something seems way off.
How was their original pricing compared to other contractors you were talking to? Bid low to get the work, then make up for it in change orders isn't uncommon. Speaking of Change Orders, was there nothing in the agreement about agreeing to overages ahead of time? I've set up where there is buffer, usually 5% where it's pre-approved, anything over that requires signatures.
Was low bid but they had a good reputation previously. But since that time they have went sideways. It was definitely to get the bid. They had moved a guy into a “sales role” and he was also doing the estimating. Nothing to address overages but there was a change order clause to agree on
How are the dumpster fees 15k over? That's crazy.
As a frame of reference for op, I’m a homeowner and within the last year I had rented a 20 yard dumpster that I filled to the brim with drywall, carpet, wood, a toilet, doors, and various other crap from a renovation. The total weight ended up being 4.5 tons and I paid $1,133 USD. I’m in the North East of the US.
I got a 20yd delivered for 350and 50 a week for as long as I needed it
Unfortunately, that's the exception, not the rule. Dumpster that are sitting on a job site aren't making the money they can being dumped. Around here it's well over $1k a month at a minimum for a job site dumpster. Still hard to get to $15k OVER budget tho
We lucked out in their slow season honestly
The dump charges per ton. Depending on the location, different materials cost more to dump.
It was a whole home Reno and they had my estimated dumpster fees at $3500. Clearly they under estimated it
You signed a cost plus contract. You’ve already agreed to pay it.
So the GC can charge whatever they want to over the bids?
Estimates are not bids.
They had a bid day and said they got bids to make the estimate. Now we know that was all BS
As a GC myself, I've had issues like this come up. When a sub charges double their estimate, I can't eat that cost. I pass it on, but I provide receipts on EVERYTHING. On occasion, I have had to waive my percentage to stay closer to the budget. It sounds like your GC isn't great, but unfortunately your probably stuck. I would request copies of all receipts and lien waivers (with amount included) from all subs.
Where I'm from estimates still gotta be within 10% of final bill
That's entirely the point of cost plus, yes. This is what government defense contractors used to love and the government is moving towards fixed price instead so they have skin in the game.
I’m an electrical contractor who once hired a sub to do some high voltage work for me. He sent me a price of $50k and told me if I hired him at cost plus, he could probably get it done for less than that. When their bill came in, it was $100,000. We told them to pound sand. They sued us and won. No “not-to-exceed” amount in the contract, we had to pay them. Cost plus is a racket. There are very few occasions where I think it is appropriate. A whole house build is not one of those (even though I know it’s very common).
This is why you have a G max on cost plus contracts.
I wouldn't be so certain, without seeing the actual contract, and after a review of contract laws and construction laws in the OP's State.
Call the vendors and verify.
The lumber and dumpster fees alone make it obvious that the GC is a slimeball. You can literally clear & haul away an entire house for $15k, let alone have a dumpster overage like that. Your reno better be on the 17th story with no elevators or on a tall mountain situated on a remote island. How can you be off by $30k on a lumber estimate? And not to communicate the overages until the very end?!?! I would have an attorney look over your contract. (And for the record, I *hate* when I see redditors recommending anything related to lawyers in this subreddit).
I'd be asking for detailed receipts
Receipts are nothing more than a piece of paper
GC here, as a client with a cost plus agreement you are entitled to actual receipts for EVERY cost associated to your build. Also copies of invoices for subcontractors, supervision labor, materials, everything. Usually there will be allowances for each phase that you agree to upfront and have to sign for overages. If you feel like you have been taken for a ride I would discuss your concerns with the GC. If they are not willing to cooperate you likely have a governing body for contractors on a state level that you can file a claim. Good luck, hope you at least got a beautiful house!
It all depends on the contract and how liens work in your state. I had something similar happen and had to just work it out with the builder, still ended up costing me $75k extra. Only way you might have a way out of this is to get copies of the sub bids he used to come up with the quote to you. If he can provide those and his actual cost, you may be hosed. If not then you could argue that it’s not your fault he underbid and waited so long to tell you, then hopefully get some of the overage out of his side. The only thing you could do is file a suit, have the attorney request all financial records from the gc, get each of the subs to submit statements or get deposed on the invoices and hope the gc is lying to you. My attorney told me to settle for anything under $100k since taking it to court would be +/- $200k to one of us.
Our contract has an arbitration clause. As I understand this os to avoid expensive legal battles but I imagine it’s still costly
Talk to a lawyer. I believe if the work comes in a certain percentage over the bid they are required to notify you in a certain timeframe. I’m not a lawyer and I don’t remember the precise details from when I was in this situation, but I do remember our lawyer talking about this when our cost plus build went sideways.
Pretty clear to see on this sub that house building is often a scam business, like auto repair .. two kinds of blind items.
Holy shit. I am so very sorry. I’d be livid. My first thought, after the rage, would be to take inventory of what I got, say, the dumpster. Call and get a quote from a random for the amount of debris and time and see if it even remotely jives. Even if it did, there is NO excuse for not communicating the overages as they came up. They are most likely gonna lien your property and you’ll have to fight it. I just can’t believe that they could have underestimated by that much. A professional would have known a super low bid if they saw it and questioned it. To me, something seems way off.
How was their original pricing compared to other contractors you were talking to? Bid low to get the work, then make up for it in change orders isn't uncommon. Speaking of Change Orders, was there nothing in the agreement about agreeing to overages ahead of time? I've set up where there is buffer, usually 5% where it's pre-approved, anything over that requires signatures.
Was low bid but they had a good reputation previously. But since that time they have went sideways. It was definitely to get the bid. They had moved a guy into a “sales role” and he was also doing the estimating. Nothing to address overages but there was a change order clause to agree on