Epic Homes

No business ever wishes to have a negative outcome when serving any client. It’s also important to point out that this customer was NOT a customer we built a home for. In the end, our work product was plans, education and budgets. The client decided that he did not wish to build with us after we completed our planning work. Unfortunately, there will be times where signals get crossed and the expectations are not fully understood by one party and gaps happen between what service can be delivered and what may be expected by a client. We believed expectations were clear. The main issue with this relationship wasn’t plans or plan design, but that the client believed we took too long to accomplish the various stages of planning. Planning is only as good as the effort made, and in the building business planning is often way under-valued by many builders, contractors, and customers. The result of a short-cut process is often a large miss in the end. The average custom builder in our market goes 20% over budget! Our average is between 1-2%. Most builders will blame the customers for such an overage by pointing out the customer can choose less expensive items. While that may be technically, or legally, accurate, that attitude does not recognize the gap between a builder’s knowledge and a client’s knowledge and whether the builder should take greater pride and responsibility in listening to a client’s wants and needs and accurately accounting for those in the planning and budgeting process. Almost all builders make a higher margin on changes than they do on the base bid, so they are incentivized to short-cut planning, which in turn encourages overages and higher fees. This often results in more sales, as builders can turn bids around quickly and get a contract signed while the client is very excited. That excitement will often cloud a client’s judgement and dissuade them from asking more questions and forcing a better planning process.

With such process the client typically pays much more for their house as the revelations of what’s truly desired comes to light and is implemented through high margin change orders. We believe that is not how a customer should be treated. Unfortunately for us, the process of gathering information takes time, as any good and thorough planning exercise will. We have found that since most builders don’t plan well, we can be labeled as slow in our bid process, when all that is truly happening is that we are taking the time to chase down hundreds of specialized questions and vetting costs, so we can give the clients a comparative analysis of various options and desires. It’s all to empower the customer to make better decisions, and to do it up front when costs are at their lowest. This lowers our margin totals vs. a builder who chooses to short-cut planning and then simply change order the customer at higher fees.

While we made our best efforts to communicate that to this client, we were unsuccessful. Our goal is for the client to understand that our process is truly beneficial to them in the end, and that every day we spend in planning is more beneficial than the days (and costs) we will lose during construction when we change. We may never be able to eliminate change, but we can dramatically mitigate it. This is the same communication we gave to this customer, but as we approached the end of planning, there were signs of frustration that we took too long to get to the point of “ready to build.” Our process starts with designing the house and our first day of design was August 11th. Through 7 major revisions, several more minor ones, and 45 hours of computer work (not counting meetings with clients etc.), we had the plans out for bid by the end of September. That’s less than 2 months to get plans ready for bid through a host of meetings and revisions. Currently, the back log with many designers is 2 months just to get a meeting. Once plans were finalized and approved, we sent bid requests, received our bids, and chased down questions, etc., during the month of October as a full set of engineered lumber quotes often takes 30 days. In this case it took 22 days and was our last bid we needed to proceed. Upon receiving the final bids, we built our budgets and spent the next couple of weeks in revisions with the clients as we assessed costs and comparatives, etc. We had our contract documents ready for banking in mid-November. By current market measurements of doing all this work, our speed outperforms the market when adding up plan design, client planning and communication, bid gathering, budgeting and contract document creation. All of this was despite having the two primary contributors to planning and design out with Covid 19 for two weeks each starting October 27th and ending in November. So, we produced the documents while battling Covid. Unfortunately, the client did not agree that we were outperforming the market and gave no grace for Covid 19 and chose to go another direction. We feel we were dramatically mis-judged against an expectation that is inconsistent with our industry and there was no empathy for our plight.

Regardless, our Professional Services Agreement (PSA) gives the client the right to leave. Where most builders require a construction contract commitment to do all the work we did, we do not do that. Instead, we have an intermediate step of a PSA where the client pays a small fee to help offset some of our time and direct costs, so we can pay surveyors, engineers, third-party designers to provide inspiration, etc., so we can get to a place where we can accurately budget the project. At no point is the client required to have us create their floor plans. They can go elsewhere, but when it’s all measured out most do have us do the plans because of the benefits of costs, accuracy and the built-in advantage of the designer being the builder too. Plus, we do our work in a 3D Architectural program that greatly assists the client with visualization, where most of the market is still either hand-drawing or using 2D Cad that makes it very difficult to visualize. Being able to visualize reduces change that happens during construction, as visualization reduces on-site revelations that lead to changes or acceptance of a disappointing outcome. This also reduces communication gaps between what was told to the designers and then to the builders, and the result is a more comprehensive plan and budget with less missed desires. We are also incentivized to be accurate and gather more details to ensure the project is closer to the desired outcome, as we can’t displace blame on the designer. Many designers leave off critical information about customer desires simply because they don’t wish to invest the time to ask the detail questions, and instead, it is left to the builder and client, which displaces responsibility.

In this situation there was a direct conflict between us and the client about value of time and intellectual property. While the numbers he uses are technically correct, he is directing the value exclusively at the effort in computer work of plan design and only for time spent on his version, which is but one of many things we did. In the end, we had well over 100 hours invested in the project across many of our key employees. Prior to that investment, the plans we started with had over 125 hours invested previously, and many of the key components and ideas included in the client’s plans contained intellectual value derived from that previous plan’s invested 125 hours. If we only take 1/3 of the previous effort, or 42 hours and add that to the time we had in this project, we spent approximately 150 hours of professional time invested on behalf of the client. In the final analysis, the client paid around $11,800 for 150 hours of professional time invested on his behalf and was granted the right to use the work product we created. If all we had done was floor plans, we could empathize with the client’s perspective. However, that is a selective viewpoint as it doesn’t account for all the other work done and the grant of rights. When the math for time vs. fees is calculated, the client paid approx. $78/hour for professional services performed primarily by the owners of our company. By almost any measure of commonly accepted rates for professional work, this is very low rate per hour, let alone when most of the work was performed by the costliest members of our company.

As far as complaints about the plans, this is hard to reconcile with historical experience, as versions of the house were successfully built before, and the feedback we always get from contractors is how much better our plans are than typical. Much of this is because we are also builders and we better understand what contractors often complain about, so we try to mitigate those concerns for not just the contractors, but our own staff. Again, we are invested in the plan success because we typically are building from them, and failures penalize us, where outside designers often never get penalized for their failures, especially financially. When a mistake is made by an outside designer the language on the plans almost always displace responsibility for plan validation to others, as if there is an “other” person to validate them. Builders and clients may do their best, but they’ll never have the advantage of the original designer, and as such, many costs related to plan mistakes end up being passed onto the client. When we do the plans that liability stays with us, so that’s an additional risk we take on that benefits the client and incentivizes us to do a better job. That is why we believe this complaint about plan quality is a result of other issues but are being misdirected at us. In this case, the client began building with another builder, and reached out to us early with an issue, and we turned around the fix very quickly. We’d like to think that despite not being selected as the builder, we didn’t avoid further obligation and ignore him, rather we turned his issue around quickly, as would be consistent with our ethical standards and corporate culture. Also, this issue wasn’t a plan issue but a lot issue. The original plat provided to us by the client wasn’t accurate, and when we were able to source the correct one, it necessitated an alteration to ensure lot compliance. So, we made the change and turned it around quickly as to not slow down his build. We stood ready to do anything else had it been requested.

However, at no point since then did he ever reach out and express an issue or ask for a correction. The first time we heard of a problem was when he emailed us and demanded a refund of money, disparaged our work product, and accused us of bad behavior. Despite this, we offered to meet and look at the plan issues and make corrections, but he refused that offer. Instead, he threatened to write us a bad review if we didn’t comply with his refund request. We again offered to work through issues, but again, he refused, and this complaint is a result. It’s an unfortunate situation, but not one where we have ever believed that our time and intellectual capital were valued and complaining about paying less than $100 per hour for professional services that also included intellectual property grants is unreasonable.

It’s also important to note that most of the payment to us was made after the client decided to move onto another builder. He had the right to simply move on and not ask to use the plans. He could have drawn new plans with an outside designer, and his payment to us for our time would have equated to only $34 per hour. He chose to exercise the clause to pay an additional fee to release the plans for his use. That was done under a new and separate agreement, Plan Use Agreement, where both he and his builder had to agree to certain restrictions to use the plans. So, this wasn’t a situation where things weren’t upfront, reviewed, negotiated, and then contracted.

Ultimately, when the client decided he wasn’t moving forward with us, but wanted to use the plans, there was a path to do so that was outlined in the agreement between us. Yet, he wished to change those terms and only pay us a $400 more to take all our efforts and use them elsewhere. In other words, we’d need to live with $34 per hour for our efforts. That is not the language of the PSA he signed, nor is it remotely fair and respectful of the work we did and knowledge he gained, as our process is very detailed and there’s no doubt that he gained knowledge about costs, ideas, sketches, etc., from our past work and experience that he will be using with his new builder. Given the speed he went from us to getting started with another, it’s very unlikely the new builder would have been able to gather the same information we did, so we fully expect that many of the decisions and ideas exchanged during our planning will be beneficially implemented with the new builder. There’s value and savings in that knowledge that could prevent upgrades and changes and higher fees.

Also, the PSA is a single page document, so it’s not like the language was buried in fine print somewhere. When we didn’t agree to his revision of the agreement, but rather asked that he honor our mutually accepted agreement, the relationship became very strained. From that point forward he became very critical of our process. We can’t speak to his state of mind, but from our point of view it certainly seemed that he was trying to revise a previous agreement, so he wouldn’t have to pay what he’d previously agreed to. We understand that every person wants to get the best deal possible and had there not already been an agreement in place that spelled this all out, then we could better empathize with his position. However, that’s not the case, and we did not wish to be devalued to that extent and instead only wanted to uphold the agreement we’d previously both signed. It’s an unfortunate situation, but we are still unsure how we could have done more, done it faster, and then handled ourselves more professionally throughout, and when there were issues, we were very responsive. However, we can’t fix what we don’t know about, and when our offers to assist are declined, what more can we do? The client has the right to stand up for what he believes in, but to unilaterally create new contract obligations that we did not agree to is simply unfair.

We wish him the best in his new home, but we don’t believe that any failures in that process that may occur have anything to do with us.