Issues with extension spiralling costs

[Slinkie]

Hi all,

I'm currently trying to decide the best course of action regarding building work on my house that is in progress. The builders managing the project have been pretty abysmal so far and there has been a lot of delays, very little communication and a few errors that have required fixing.

The work carried out though by the subcontractors has been good, it's the lack of project management that has caused the issues.

The work is currently at a stage that I can ask that no further work is organised by the builders, we can finish the job with our own contacts which is just finishing the interior.

One of my major issues is the current cost to us. We are currently over budget by a third and the project is not yet complete. The invoices have no breakdown and they won't provide justifaction for the costs. I have since heard from friends of my wife that the same building company overcharged them for work that had been done. What I want to do is get a third party Resi surveyor to value the work and if their value is signifcantly lower than the cost we have paid I want justification for the overcharge. However, will this actually lead to any benefit to me? Has anyone done anything similar in the past?

At this point I don't know whether it's just better to draw a line under thier work and just live with the fact they weren't the best choice.

One further thing is that we have yet to have the building work signed off. The structural work is complete so I presume I can get this done but if there are any issues I presume the builders will need to rectify (we had plans drawn up and signed off pre build without any deviations so I presume it'll be ok). If I ask the builders to stop future work and there are fixes that need to be made due to errors on their behalf are they liable to fix them?

Thanks for any help and advice.

 

[Kill_Phil]

Best getting legal advice to be honest. Have you checked your house insurance as sometimes will be included.

 

[1pudding1]

I'm guessing you need building regs approval for this, so how is this being done? Regular inspections on pre-approved plans? If so, then BR need to come and inspect whats been done so far now before its covered up with plasterboard etc.

 

[koolpc]

Get it all checked now before you boot them off of site.

 

[Cosmic182]

What's the reason you're over budget? Changed ideas throughout? Have you had an estimate for the works? Material prices are always on the rise (however the builders estimate usually accounts for this)

How can a surveyor justify any works? They can't justify labour costs? Each builder could charge a different hourly rate to the next Joe bloggs.

If you've had a written estimate for the works, each monthly invoice doesn't have to have a significantly detailed explanation of what the invoice is for....

If however you've had no extras done throughout the job and you're already a third over budget/his estimate and not even completed then surely you should have been asking questions before now?

 

[roge8014]

Oh man, I think you've found out the hard way how construction projects can go wrong.

I posted on another thread about "major project" work and for any significant works its a good idea to employ a PM (sometimes those who can design works can also PM the works). But you're past that now and hindsight is a cruel mistress! I've seen this time and time again, costs can quickly escalate and leave you scratching your head as to why.

I'm a chartered QS, BUT my area of expertise is in asset life cycling not in project works, so bear that in mind. I assume you never got a full breakdown of the quote you had when you tendered the original scheme? Hopefully you got more than one quote? Was the original quote significantly lower than the others? Did you check out any other work done by this builder (like actually speak to previous clients)?

If you had a quote breakdown (e.g. foundations £x, external walls £x, Electrics £x, Builders Work £x) then it should have been relatively easy to track costs and payments. If they're just charging you time and materials that's when it gets very tricky. How was the "contract" signed? Did to cover fixed labour and material costs? Did you hold back any money on their invoices (retention payment)?

Of course you could get in a residential surveyor to come in value the work done and get them to negotiate the difference - but that won't be cheap and probably difficult, particularly if the builder won't play ball, although we surveyors could use industry rates to calculate cost of the works, especially if you use a local Resi surveyor, they'll have their finger on the current going rates in your area for work. Sadly though, if you've accepted a lump sum for the works, with no breakdown, the builder may have simply "bought" the work and now you're paying for the extra cost (now they know exactly what its costing to do).

Would it be a benefit? I suppose it depends on the value of the works you have done and left to do, it might not make any financial sense. And of course the contractor could drag this through the court if you decided to follow through (more money, time and pain). Or you could just cut your losses, sack the main contractor and (as you've said) simply finish the work yourself, or get another contractor in BUT make sure you schedule the works required, get fixed costs for it and AGREE up front that no work should be done without your express permission and with detailed costs to back it up or if costs are significantly different to what they quoted for. Either way you will swallow more additional costs I'm afraid.

As an alternative if you're happy to continue with this builder, stop the works. Sit down with the builder get them to schedule the remaining work and get them to give you FIXED costs for each item and ask them for a programme of works so you can see when work is getting done and when it will all be finished. This way you can track progress. Make sure you get the site "foreman" to see you first thing and last thing at night before they leave to review progress and work to be done in the next few days/week. As they've gone beyond their original quote, this isn't an unreasonable request. If they won't do that (put it in writing to them by the way), then terminate and do one of the above.

As for certification of the building works - who got the planing sorted (if planning was needed of course) and who is liaising with the Council for certification? If its you, then yes, contact them get them out to check the structural work is done correctly (they should have been sent any calculations and drawings done by the structural engineer or builder before the work was done in any event - they shouldn't have done any structural work until the Council had chance to check and approve the calculations).

Best to figure out which route will cost you less and do that. Good luck, hope you get it sorted.

 

[Semple]

They can't justify labour costs? Each builder could charge a different hourly rate to the next Joe bloggs.

I suspect that's why the builder is being cagey about providing breakdowns of costs. Whilst prices of materials may have gone up and be beyond the control of the builder, his labour rates shouldn't have changed - unless as you'd mentioned, something needed changing as a result of OP changing their mind.

If however you've had no extras done throughout the job and you're already a third over budget/his estimate and not even completed then surely you should have been asking questions before now?

I'd agree with the latter part, surely you've not just got an invoice that's now 1/3rd over. If you have then, then you should be able to deduce how much work was done since the previous invoice and weigh up the costs.

For a legal standpoint this will come down to what your contract outlines with the builder. Which emphasises pretty poor on the builder for not bringing up the increased costs with you earlier - i.e. we'd quoted X for these materials but they're now X+50%, or we'd originally quoted Z hours for this part of work, but due to Y difficulties it's actually taken y + 25% more time, and therefore cost has increased to X.

 

[DB_SamX]

Get it all checked now before you boot them off of site.

+1.

Opb
There's just not enough information without knowing all the parties involved, costs, what's been done, etc. Hard to say what you should do or if it's worth it. Best to speak to a PM/QS and ask them for a fee to review everything amd advise you if you could recoup any costs.

 

[sovietspybob]

Just for reference when we did our self build our invoices from our main contractor were incredibly detailed, including copies of invoices from all builders merchants and timesheets and rates for each person on site, even down to litres of diesel used in the generator and telehandler.

 

[Cosmic182]

Just for reference when we did our self build our invoices from our main contractor were incredibly detailed, including copies of invoices from all builders merchants and timesheets and rates for each person on site, even down to litres of diesel used in the generator and telehandler.

99% of builders (more so self employed will not do this!!) You clearly had a large (ish) firm who had a good price in and justified these spends within areas you would not see. Otherwise you would be questioning their profits.

 

[sovietspybob]

99% of builders (more so self employed will not do this!!) You clearly had a large (ish) firm who had a good price in and justified these spends within areas you would not see. Otherwise you would be questioning their profits.

To be fair they were a fairly small firm, maybe 4 or 5 guys on staff and say 10 other self employed they used regularly. They were straightforward in that they charged a 20% uplift on everything and that was that, the owner project managed for 'free' essentially.

 

[jaybee]

Why can traders/builders and the likes not quote a price, and then you agree and that's the price?

For example,
I get Ford to do a job on my car and they quote a price of £300. If it comes in a penny over I won't pay it, because it was agreed.
I got a plumber in to fix something. He quoted me a price and I agreed it. Done.

Why do people accept Price X with the clause of "we may add to it a lot". Why do we accept this?

 

[Buffman]

Why can traders/builders and the likes not quote a price, and then you agree and that's the price?

For example,
I get Ford to do a job on my car and they quote a price of £300. If it comes in a penny over I won't pay it, because it was agreed.
I got a plumber in to fix something. He quoted me a price and I agreed it. Done.

Why do people accept Price X with the clause of "we may add to it a lot". Why do we accept this?

Because unlike cars (unless heavily custom modified), they are fairly standard and knowing the job can be applied due to knowing the vehicle.

Houses are more complex as the housing stock in Britain has variety. Lifting floorboards etc to look at pipes /cables is more involved that lifting an engine hood.

So yes tradesmen can quote fixed price fees (if they come have a look) but if you want extra work it will cost more


Overall I do agree garage rates are far cheaper than tradesmen

 

[jaybee]

Because unlike cars (unless heavily custom modified), they are fairly standard and knowing the job can be applied due to knowing the vehicle.

Houses are more complex as the housing stock in Britain has variety. Lifting floorboards etc to look at pipes /cables is more involved that lifting an engine hood.

So yes tradesmen can quote fixed price fees (if they come have a look) but if you want extra work it will cost more


Overall I do agree garage rates are far cheaper than tradesmen

But haven't you defined the very problem? A lack of requirements gathering up front. If I PM'd a project at work and I went over budget - especially by a third - I'd expect to lose my job because I'd be spending money that does not exist. A customer should be able to say I have X money and it can't go over it. It sounds like poor planning to me. Unexpected increases = planning that should have been done better which gets passed onto the customer paying the bills, and we as Brits seem to accept this to get anything done. I don't like it.

 

[Cosmic182]

But haven't you defined the very problem? A lack of requirements gathering up front. If I PM'd a project at work and I went over budget - especially by a third - I'd expect to lose my job because I'd be spending money that does not exist. A customer should be able to say I have X money and it can't go over it. It sounds like poor planning to me. Unexpected increases = planning that should have been done better which gets passed onto the customer paying the bills, and we as Brits seem to accept this to get anything done. I don't like it.

Your job sounds far different to the likes of tradesmen. With certain trades, jobs, the eye cannot forsee unviewable parts of the job. Such as you cannot expose certain parts of work that are to be undertaken on a site visit, thus meaning once you open up and investigate this could mean one job turning in to another or several.

Such as plumbing and electrics, these are usually priced on a PC sum, provisional cost, meaning it can be subject to change depending on what has to be done.

This can't always be accounted for on a quote but it's something you can explain to a customer face to face, the OP has sided all his story against the tradesmen he has used but we have no information on what has really happened.

 

[oggiet]

But haven't you defined the very problem? A lack of requirements gathering up front. If I PM'd a project at work and I went over budget - especially by a third - I'd expect to lose my job because I'd be spending money that does not exist. A customer should be able to say I have X money and it can't go over it. It sounds like poor planning to me. Unexpected increases = planning that should have been done better which gets passed onto the customer paying the bills, and we as Brits seem to accept this to get anything done. I don't like it.

That's why I always joke with my Mrs that we should import German tradesmen

 

[DB_SamX]

Why can traders/builders and the likes not quote a price, and then you agree and that's the price?

For example,
I get Ford to do a job on my car and they quote a price of £300. If it comes in a penny over I won't pay it, because it was agreed.
I got a plumber in to fix something. He quoted me a price and I agreed it. Done.

Why do people accept Price X with the clause of "we may add to it a lot". Why do we accept this?

As Buffman has said, houses are all indicvidual. Let's say you are digging foundations fot an extension and you find an obstruction that needs removing . It's no one's fault. The contractor hasn't factored in an extra day labour to do it. Assuming you want your extension to proceed, you have no choice but to pay up for the additional work.

Equally you can't expect contractors to factor in unknown risks in their quotes. That's why domestic clients should always allow for a contingency poy of money.

 

[Semple]

As Buffman has said, houses are all indicvidual. Let's say you are digging foundations fot an extension and you find an obstruction that needs removing . It's no one's fault. The contractor hasn't factored in an extra day labour to do it. Assuming you want your extension to proceed, you have no choice but to pay up for the additional work.

Equally you can't expect contractors to factor in unknown risks in their quotes. That's why domestic clients should always allow for a contingency poy of money.

Pretty much this.

In theory there's no reason you couldn't come up with exact pricing based on requirements. But it would require one hell of a prep/investigation. In DB Sam's example you'd have to have the area xray/radar scanned to check if there's any potential issues before the dig commences. All of this prep/investigation would cost more than what would get potentially added to your bill as a result of extra work.

 

[Brok]

But haven't you defined the very problem? A lack of requirements gathering up front. If I PM'd a project at work and I went over budget - especially by a third - I'd expect to lose my job because I'd be spending money that does not exist. A customer should be able to say I have X money and it can't go over it. It sounds like poor planning to me. Unexpected increases = planning that should have been done better which gets passed onto the customer paying the bills, and we as Brits seem to accept this to get anything done. I don't like it.

I would love to have perfect information every time we quote for a project (software consultancy) but the reality is its often impossible to have the complete requirement up front when quoting. There's a reason T&M projects exist and its to manage the risk around uncertainty. Otherwise you end up baking in so much contingency into your fixed price that you will never get any project initiated. That said, budget management is still required and just because there are unexpected expenses doesn't mean you should only declare them when the initial budget is consumed and that does suggest poor project management. You should be in front of those conversations early so a resolution can be agreed with the client. Equally, its the responsibility of the purchaser to include their own budget contingency fund in their planning as its unrealistic to expect every project to come in at or under budget.

I'm intrigued as to what industry you work in where perfectly formed requirements are provided up front without any scope for change later and for which the cost/effort can be precisely calculated. Sounds nice!

 

[Deleted User 298457]

I would love to have perfect information every time we quote for a project (software consultancy) but the reality is its often impossible to have the complete requirement up front when quoting. There's a reason T&M projects exist and its to manage the risk around uncertainty.

And it HAS to be said and made very clear, if you are going on T&M then the BUYER owns the contingency.

I'm intrigued as to what industry you work in where perfectly formed requirements are provided up front without any scope for change later and for which the cost/effort can be precisely calculated. Sounds nice!

"I want 330ml of sugar water"
"Here's a coke"
"Here is 70p"

Probably the only scenario it ever worked