Why are you doing the work? Is he refusing to supply his own subs?

Finding less expensive subs and negotiating with them is a lot of work, but overseeing the work, dealing with any punch list items that sub needs to come back to fix and floating payment to the sub until the bank draw are all reasons why your GC is earning some (but I agree that it should not be all) of the 15%.

We're going the OB way on our house build, but when we talked with GCs, we intended to include contract language allowing us to find our own cabinets, appliances and countertops outside the 15% and manage it all ourselves. The only extra work for us would be showing up to let them in. If one of our GC's subs damaged something one of our subs did (or vice versa), we would have had some negotiating to do about oversight of the fix.

Without that language in your contract, you're going to pay 15% no matter who finds the subs.

I guess I'm just venting my frustration at the fact that we have a number of items in our contract that are Allowance items (like painting, flooring, tile, etc.). So my GC goes and gets one, or MAYBE two proposals and invariably they're over the allowance, so I either suck it up and eat a big fat Change Order (plus another chunk of overhead and profit on top of it), OR I spend my precious few hours a day looking for subs, setting up meetings on site, walking them through, etc. and THEN he gets 15% on top of that. To me, at a minimum if his subs come in over the Allowance, he should be trying harder to find the best price, not leaving it all to me. But I guess there's no motivation there.

Sounds like a good lesson learned for next time, albeit a painful one. If you'll permit me some Monday-morning quarterbacking, it would have been better to change those allowances into actuals before signing the contract with the GC. Allowances for materials is one thing, but there's no reason labor costs can't be nailed down before starting. His original bid could include an allowance, so that he doesn't have to do a ton of work if he's not going to get the job, but once you picked him he should have sent the electrician over to look at all the specifics you wanted and firm up a price. Then you could have protested at the time and insisted he find a few more while you still had the leverage.

After the fact you're probably on the losing side of the contract, but you could still attempt to negotiate (the worst he could say is no, but you're no worse off). Express your frustration to him in a calm, professional way, and propose to cut the O&P in half for the subs that you find.

Well, as for leverage, I don't think I ever had any. In our market, the Contractors rule and the clients are at their beck and call. The reason that we kept allowances in the contract is because I needed them to get started before the winter came and delayed us a year, so we agreed that we'd nail down final pricing later on certain items. He did have pricing in his original cost proposal but they were all quite high and based on assumptions (like stone bathrooms rather than ceramic tile ones) that we were changing for budget reasons. Rather than re-bid everything again before signing the contract, we put in allowances. I don't think it's that uncommon, at least from what I've heard.

Caligirl -

I am a caliguy, and, I GC all my own work on my properties. You seem competent, you may want to go that route yourself next time. You have met the GC, tell me that NASA is breaking down his door to give him a job. Being a GC isn't hard work, you just have to apply timelines and good common sense.

It has always worked for me.

bomb

Thanks bomb, I did consider GCing the whole thing myself but I do have a job and two kids as it is, so that just didn't seem like a smart idea. Plus, I figured I could blow my savings with just a few major mistakes (and the cost of therapy, divorce court, etc.). At this point in our project, I could easily complete it on my own, especially since I'm putting in the time anyway, but my GC isn't walking away from the easy money now and the contract is rock solid. So, after a very rough day of reality I'm just going to suck it up and absorb these lessons for if there ever is a next time, or to share with others.

caligirl ---
I could have written your post. This is the Exact situation we are in. We do the sub-finding, negotiate, get the price within the allowance (because GC couldn't),
do quality control, call inspections, check permit timeline, legwork, you name it I do it.
I am devastated actually. This is our 2nd GC, our 1st embezzled and then filed BR.
This one is also fraudulently billing and taking excess, returnable materials for other projects.
We hired a lawyer last week, last Friday he decided to file a lien for the remaining fee, yet he has until August to finish house, which is when remaining fee is due. This hurts our permanent financing as well.
This is the builder our bank set us up with.

Boy, will I do things differently next time, oh I forgot there will be no next time. Never again, glad I like this house.

Caligirl, sorry to give you my sob story but sure wish you were closer (I am in Oregon) I would pour you a glass of wine and toast to the great homes WE are building.

Luckily, my wife and I realized that we were heading down the same dismal path. Every quote from our cost plus GC had glaring holes, none matched our specs (we handed them a 5 page spec document outlining everything except the final fixtures and paint colors).

We didn't think we would have time while working full time, but with the GC's we had bid on the house, we would've been spending so much time pointing out where they messed up that we might as well do it ourselves.

They also acted like they could get better prices on subs and materials. That still makes me smile. I call the same suppliers and contractors, and they all charge me the same price as the GCs. The only Contractor discount is for a Contractor who pays his bill in cash, immediately.

Not to mention the great internet suppliers that folks on this site have used and recommend.

I have a question about allowances. I have bids for labor that are set and bids that include allowances for stuff that I choose (fixtures, tile, etc.) or where the costs might change over time (lumber). It never occured to me that something that changed that allowance would be considered a change order. Is that typical?

Say, for example, something isn't completely settled so the allowance is x dollars for the actual tile to fill a known space. If I buy tile that's x+10 in price is that considered a change order when all along it was clear I was paying for whatever the tile was going to cost? I thought that allowance meant "expected" cost of an item so that a budget could be constructed that had some flexibility for the costs of things (e.g., lumber) and choices made down the road (e.g., tile). I think I've made all my choices but the idea of paying 20% profit instead of 15 % profit just because the costs of lumber went up seems...well stupid and absurd!

I thought change orders were those items where you actually make a change.

OMG acountryfarm, I'm so sorry to hear about what you're going through. That sounds just awful. I really appreciate the support and wish you all the best in getting through your project too. It's so hard. I wish I had found this site before I started this project. I wish I had listened to my gut when I was deciding between this and another contractor. Such a mess.

Fern4, I might be mis-stating the term "allowance". You're right, typically allowance is for materials that the owner will choose later, like tile or appliances, and the installation of these materials is included in the contract. However, like I said, the original proposal was for things like a stone bathroom, and I knew we'd be doing ceramic (which is less for material AND installation), so we put a figure in for the whole thing and now we're bidding it out (or rather I am). But one thing I can say for sure is that in no way should change orders carry a larger Profit and Overhead than the base contract. P and O should be the same amount no matter what, so that a Contractor doesn't have a benefit to changes, it should just be fair.

Yes, change orders are usually items where you make a change. But they also include "unforeseen conditions" which can be a point of contention as well. What should an experienced contractor with 20 years under his belt have "foreseen"? Should they only look at the drawings and exclude everything else even if they know it's going to be necessary by Code, or whatever? It depends on the Contractor, their experience and integrity.

I raise a glass to all of you GW's who are such a great source of support and knowledge.

caligirl --- I wish, I wish, I wish I too found this site before. However, it has sure made the last few months stress so much more endurable. Everyone is so supportive and wonderful sharing knowledge of BTDT issues & projects.
Good luck to you, I will be anxious to see your finished pics.

Kimberly

"finished" wow, that's a concept that is hard to get my head around right now. Considering the fact that we've been in this for 7 months and still don't have a roof, it's really really hard to imagine taking pictures of my finished home. BUT, we have to live the dream.... or we start going nuts.

Take care and hang in there, you're not alone.

caligirl -- 7 months , you must be on the express route, lol. This is our third year.
To make it worse we packed most of our house many moons ago, as when we started they said 6 months. In order to make our current home livable we packed. Well its all still in storage. I can't tell you how many things I have had to re buy because it was in storage. If you really want me to sob....
..... those storage units were broken into (by our subs) while we were out of town. They ransacked 2 50 ft. units and took my (very irreplaceable ) sterling silver. Three flatware chests full plus many additional pieces. Some of this was from my birth grandfather whom I just met a year ago. I am adopted, it was my mother's father. The absolute wonderful thing is they ran out of gas while driving back to their respective town. Sheriff spotted this car (suspicious) and started questioning them. The sheriff then saw all my stuff, (thank you God). They could trace it to me because there were shipping labels on the box. They only had it in their possession for maybe 2 hours. I feel very fortunate for sure. So now we have security and one guy is waiting sentencing. He has a extensive record so they are not looking at him with too much compassion.

Anyway, yes living the dream, keeping perspective and knowing we are so very fortunate in so many ways is what keeps me from going batty as well.