Recently a couple came to me upset that they were forced to accept a change order on their roof replacement project. The value of the change order was 50% more than their initial quote.
The contractor presented them with the change order only after their existing roof tiles had been stripped off the roof.
The Contractor told them that the change order was for additional work required by the local building code. He said that he could not install the new roof without first replacing the existing plywood decking. A local fire ordinance required replacement of the fire rated plywood and the contractor had excluded replacing plywood from his proposal.
The couple argued with the contractor which caused the contractor to call his men off the roof and stop the work.
The couple stood their in front of their home with their roof exposed and a pile of old roof tiles on the front lawn. The contractor produced his contract and cited the code regulation to support his claim.
For anyone caught in this situation, this can be gut wrenching. You have no choice!
At this stage, the contractor could charge anything he wants and you would be obliged to pay.
Your only alternative would be to go back out and find someone else, but you would be left with an exposed roof and maybe even have to cart away the debris the first guy leaves behind. Basically, there is no choice but to accept the change order and move on.
So what went wrong and how could this have been avoided?
First let’s see what the couple did right.
This couple did solicit multiple bids, so they were not relying on a single proposal.
They did solicit quotes from local contractors familiar with local regulations.
In this case the couple also had unit pricing for new plywood, so the contractor had to honor that rate.
One would say they did go about this the right way. They claimed that all of the solicited contractor’s excluded replacing the plywood decking. All of the contractors stated that they could not know if the plywood needed to be replaced without taking up the tiles.
However, there are a number of subtle changes that this couple could have made which would have resulted in better results.
1. They failed to request the proposal on the same bid form.
When this homeowner solicited proposals they did not require the contractors to use the same bid form. This gave the contractors freedom to present their quotes in whichever format the contractor chose. One guy quoted a unit price for plywood while another included an allowance. In turn this made the homeowner’s work of comparing the quotes more difficult. This couple choose the guy with the unit pricing. They did not understand what the allowance was for and how the allowance would work. Rather than spending more time to consider the differences, they chose the bid that was less intimidating.
Before you solicit a quote always create a bid form and require that the contractor presents their price on your form. Ask for as much detail as possible and always take the time to review specific differences.
2. They failed to ask for a fixed price.
All of the contractor indicated that there was a chance that the plywood would have to be replaced. In hindsight, it seems obvious that they all were aware of the local ordinance and simply were not forthright with the owner. Anytime you have a potential for a change order, the way to deal with this is to ask for a fixed price (this is called an add alternate price).
Fixed prices are better than unit prices because a fixed price is more predictable. Make sure your bid form includes a line item for add alternates, but make sure you describe the scope of the add alternate in as much detail as possible.
3. They failed to invest in preliminary studies.
It may seem unreasonable to spend money on an architect for a simple roof replacement, but for a few hundred dollars, an architect could have informed the couple of the local ordinance and could have inspected the plywood from inside the attic to determine if it needed to be replaced. In this instance the Architect’s cost would have been less than 5% of the total cost of this work (inclusive of the change order). The Architect could have also advised the couple on how to breakdown pricing on their bid form and helped draft the description for the add alternate.
Even the most basic construction projects benefit from preliminary work. You should always hire someone to produce a report or perform and independent review. While this does add some minor costs, the benefit of having your own professional inspection with recommendations on how to perform the work is an invaluable tool for soliciting equal bids and ensuring that you are not blind-sided by unknowns.
These simple subtle changes would have saved this couple the gut wrenching drama they experienced. I also believe they could have paid less overall (including the architect’s fee).
Soliciting prices from contractors is more than picking up the phone and asking for a quote. Even the simplest remodel or repair work deserves some level of investigation and preparation.
Tell me your stories. Have you experienced similar circumstances? Do you think these simple changes would have helped you?
2 Comments Add yours
Luis – This is a write up that most home owners should be made aware of. As buying a home would be one of the largest purchases one would make, it would make sense that a professional opinion, whether regarding purchase or repair, be critical to the decision making process.
Peace of mind knowing you made an informed decision is worth more than 5% of any job cost.
Thanks Adrian…Happy you found it valuable.