Any stories of construction costs far exceeding original estimates?

[Anonymous]

Your contract is cost-plus? I think I know why it's going over....

[Anonymous]

Can you explain how this is happening? With our renovations, we have a contract with the contractor for a set price. We were purchasing a few items ourselves but that was spelled out in the contract. The only time we get charged over the cost in the contract is when we ask for changes. And we know not to ask for changes.

What exactly is happening in your situation?

[Anonymous]

Anonymous wrote:Your contract is cost-plus? I think I know why it's going over....

Most high end builders are cost plus. It is a very transparent way of building, if both parties follow contract.

[Anonymous]

One reason this happening more is that owners don't want to pay for CDs and only contracts the architect for the bare minimum. Then the little details that are required to keep project moving aren't detailed on the drawings. Then there is the cost of figuring out, back tracking, delays. Do that 10-20 times on a house and it adds up fast.

[Anonymous]

Anonymous wrote:One reason this happening more is that owners don't want to pay for CDs and only contracts the architect for the bare minimum. Then the little details that are required to keep project moving aren't detailed on the drawings. Then there is the cost of figuring out, back tracking, delays. Do that 10-20 times on a house and it adds up fast.

Mean to say "don't want to pay for FULL CDs".

[Anonymous]

Recently complete a major project that included both, a really really bad GC and a fantastic GC. Narrowed down to two contractors with nearly the same bids. Unfortunately, selected the local contractor over a contractor that was going to travel 2 hours each day. That contractor, Optimum Construction run by Omar Elrahimy (See the thread - Warning for those looking for a contractor) immediately started trying to get additional funds, did not complete anything and claimed he could not work because of covid unless I would pay 50% more. Needless to say I said no. Went back to the other contractor. They took over the project honoring their original proposal and the only additional costs were for changes where I asked for more. No issues, fantastic to work with. Your GC should be able to do a proposal and stick to it. If not, they failed the first task of being a GC unless they are like Omar Elrahimy.

[Anonymous]

Anonymous wrote:I got an estimate in December 2021 for kitchen remodel. $50k (10 x 10 kitchen, not too luxurious.)
In April 2022 the estimate was revised to well over 70K. I brought it down to 60 by eliminating pendant lights over the sink, a couple of glass-front cabinets, and switching from solid hardwood floor to engineered wood (thin layer of hardwood on top of cheap core.)
Work started July 2022 and ended September 2022. Ended up costing $70k even after my cuts.

This is nuts for 10x10 size. What kind of cabinets did you get? Someone was ripping you off if they reduced $10k for lights, cabinets and solid hardwood. Construction is not as expensive; just run the basic math of cost per hr of labor and you would get an idea how much fat there is.

[Anonymous]

Anonymous wrote:Sorry this is happening, it can be really distressing. We did a big renovation, including an addition, and I don’t remember the exact numbers, but we did blow past our original budget. In our case, the contractor was up front about where costs were coming from when we asked about it. It all checked out but was still stressful to write those checks.

I think it’s pretty normal for costs to exceed estimates, especially in this era of inflation/supply chain issues, but definitely don’t be afraid to ask them to justify it.

I guess if you can chose to get your house built, then certainly afford it as well. Not sure why you are complaining. A lot of people like you asked to increase the minimum wages so this is what we get in return. A pool of illegal immigrants working in construction industry just improves the margins for their bosses.

[Anonymous]

Anonymous wrote:I got an estimate in December 2021 for kitchen remodel. $50k (10 x 10 kitchen, not too luxurious.)
In April 2022 the estimate was revised to well over 70K. I brought it down to 60 by eliminating pendant lights over the sink, a couple of glass-front cabinets, and switching from solid hardwood floor to engineered wood (thin layer of hardwood on top of cheap core.)
Work started July 2022 and ended September 2022. Ended up costing $70k even after my cuts.

This is very silly, PP. I don't know what you were getting done at $70K for 10x10 medium grade kitchen. Your GC took you to the cleaners.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I got an estimate in December 2021 for kitchen remodel. $50k (10 x 10 kitchen, not too luxurious.)
In April 2022 the estimate was revised to well over 70K. I brought it down to 60 by eliminating pendant lights over the sink, a couple of glass-front cabinets, and switching from solid hardwood floor to engineered wood (thin layer of hardwood on top of cheap core.)
Work started July 2022 and ended September 2022. Ended up costing $70k even after my cuts.

This is very silly, PP. I don't know what you were getting done at $70K for 10x10 medium grade kitchen. Your GC took you to the cleaners.

100 year old house, every single wire and pipe in the walls had to be replaced.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Your contract is cost-plus? I think I know why it's going over....

Most high end builders are cost plus. It is a very transparent way of building, if both parties follow contract.

For a reno? I don't think that is typical at all. I've heard of it for a new build, but not a reno. Seems prone to exactly what is happening to the OP. I've always done fixed price and come in pretty close to that price.

[Anonymous]

Anonymous wrote:Recently complete a major project that included both, a really really bad GC and a fantastic GC. Narrowed down to two contractors with nearly the same bids. Unfortunately, selected the local contractor over a contractor that was going to travel 2 hours each day. That contractor, Optimum Construction run by Omar Elrahimy (See the thread - Warning for those looking for a contractor) immediately started trying to get additional funds, did not complete anything and claimed he could not work because of covid unless I would pay 50% more. Needless to say I said no. Went back to the other contractor. They took over the project honoring their original proposal and the only additional costs were for changes where I asked for more. No issues, fantastic to work with. Your GC should be able to do a proposal and stick to it. If not, they failed the first task of being a GC unless they are like Omar Elrahimy.

Name the good GC please. I'm looking for someone to redo my kitchen. Thanks

[Anonymous]

Anonymous wrote:

Anonymous wrote:We had our 3100 sqft basement finished during COVID. We went with a design build firm that quoted us in writing a not to exceed price of $100k. The allowances given to us were for mid/upper grade finishes. We came in $16k once our selections were completed.

They mention all this on their website and not to mention all the work is backed by a 12 month and 24 month punch-out list.

You lost me at 3100 sq foot basement.

Room for an oubliette!

[Anonymous]

I've seen a few different ways to structure contracts to try to keep costs reined in. These were from friends, not sure how successful they were.

- Be transparent about a reserve (say 10%) and offer half to contractor as a bonus if costs are kept in check elsewhere
- Incentives for on-time performance and penalties (like covering a rental) if it goes long
- Agreement up front about what to do if material prices shift significantly (like 10-15%) in either direction. We interviewed one GC who would absorb the first 25% of any significant increase, but then we were on the hook for the rest. And if prices went down significantly, he got the first 25% before he passed on the savings to us. Seemed fair.

[Anonymous]

Anonymous wrote:Recently complete a major project that included both, a really really bad GC and a fantastic GC. Narrowed down to two contractors with nearly the same bids. Unfortunately, selected the local contractor over a contractor that was going to travel 2 hours each day. That contractor, Optimum Construction run by Omar Elrahimy (See the thread - Warning for those looking for a contractor) immediately started trying to get additional funds, did not complete anything and claimed he could not work because of covid unless I would pay 50% more. Needless to say I said no. Went back to the other contractor. They took over the project honoring their original proposal and the only additional costs were for changes where I asked for more. No issues, fantastic to work with. Your GC should be able to do a proposal and stick to it. If not, they failed the first task of being a GC unless they are like Omar Elrahimy.

When we were planning our addition we were picking between optimum construction and another gc. To this day I regret the decision and it has been a costly one. Our initial estimate was already high but it ballooned quickly with the finish materials. We should have said no at that point but optimum seemed like a professional business but boy were we wrong. Between the lack of communication and failure to deliver the finish materials despite paying for it upfront the whole thing has been a nightmare. If you get something done make sure the draws are clear and the moment things start to balloon IMHO take a step back and follow your gut.