Normally when a contractor comes out and reviews the work to be done they will provide you an estimate of the final cost. Estimates are just that they are an approximate value that the contractor will try to come in at for the work that they expect will be necessary to complete the job.
This is where the problem arises. The home owner looks at an estimate and thinks that this is the set in stone cost and the contractor looks at an estimate and knows from prior experience that it may or may not cover all of his costs. To compensate for this the contractor builds in a profit that normally will cover small adjustments in materials and labor but when the cost to complete the job is outside of that window the contractor may sometimes have to ask for an increase in the estimate cost to cover his costs.
When you sign a contract for work to be done changes to estimates often require official change orders that are signed off by the home owner and the contractor so when a contractor comes to you with a change to the estimate you need to understand why and what your rights are.
However there are situations such as damage to underlying structure that could not be seen that will change the cost of a project.
Changes In Contract Estimate Prices Due To Unforeseen Underlying Damage
If for example you are having a kitchen installed and the flooring contractor removes the old floor and finds that there is water damage to the subfloor or joists under the floor that must be repaired. Some contractors might be able to handle this work themselves or they might need to hire an outside crew to complete the repairs before the original project can continue. The same is true for many projects that your contractors provide estimates for and although the contractor often should be able to predict the underlying damage they often can not.
In these cases it is well within the contractor’s right to ask for extra compensation for the project. The work in the original project requires this work to be done before it can be completed and it is not the fault of the contractor that this work must be done.
Changes In Estimate Costs Due To Contractor Estimate Mistakes
In other instances a contractor might make a mistake in estimating the costs of the project due to their lack of understanding of the work. If the flooring contractor estimated the job but didn’t include flooring glue because they forgot or didn’t realize that it was required then this is not an ordinary mistake. They may be working with a new product that they don’t have knowledge about or it simply could have been them forgetting to include the cost. Whichever the issue the cost of this mistake normally should be carried by the contractor and not the home owner. The reason being is that the home owner hired the contractor to do the work because they expected it to be done in a professional manner. That would mean the contractor should have known the costs and should have been able to estimate them correctly.
Changes In Materials Costs Effecting Estimate Costs
Changes in materials costs can also be a factor. If the contractor gets hit with a large change in materials costs that are out of his ability to predict then it is within his right to ask for the contract to be adjusted to allow for his fair compensation. If for example materials costs go up because there are strikes at factories, if there are shutdowns because of national disasters or other things that are out of his control then these instances can effect the cost of materials due to shortages.
However if the contractor estimates the cost of the project but does not account for the accurate products that are being requested by the home owner then this is not something that is out of their control. Such as if the flooring contractor estimated the cost of the flooring based on a generic flooring material but the home owner requested in writing that only product from a specific manufacturer be used. Now in some cases a contractor may be allowed to substitute products that are of the same quality and type but if a specific product is requested the contractor should know or find out if it costs more and include that in their estimate.
What Are The Home Owner’s Rights When A Contractor Changes The Estimate Cost?
When there are changes to an estimate the reason for those changes are the most important factor. Was the cost change out of the control of the contractor and are they being honest with the customer or did the contractor make a mistake that increased their costs.
In most states and additionally in many cities there are consumer bills of rights when dealing with contractors. They are set up because situations like this happen frequently enough that the consumer and the contractor need to understand the proper methods of conducting themselves.
Additionally there is something called the Uniform Commercial Code that sets up rules for how people and companies are suppose to enter into contracts. If you watch any of the daytime court shows and a contractor is before the judge the judge will ask did you both agree to the price and the work to be done? and if the answer is yes then its a legal contract but if the answer is no then no contract for work was established and that is where it can become a problem.
The best thing when getting a contractor to give an estimate is to have it written on official paperwork and have it list all of the rights and exceptions when it comes to the Estimate Price. Unfortunately often estimates are written on a piece of scrap paper with just a price and they do not include any of the important things that are said between the contractor and the customer.
If you want specific materials used then you must list them. If you want a contractor to complete the work by a specific date then it must be listed. If a contractor wants to be protected from unknown underlying damage or changes in material costs out of their control then there should be fine print saying that.
Final Note
The importance of a contract is that it protects both the customer and the contractor. As a customer you have the duty to pay the contractor for the work they performed including materials and other costs associated with the job. As a Contractor you have the duty to perform the work in a workmans like manner meaning with quality and at a price that is agreed to by both parties before the work begins.
If a contractor consistently underestimates material or labor or other costs and tries to force the customer into picking up those costs at the end of a job this is unfair business ethics and if it happens enough the contractor will soon find themselves in court and out of business.
On the other hand the customer must understand that sometimes the Estimate Cost can not be predicted and the contractor is working in the interest of the customer when these additional costs arise.
In many instances an estimate is exactly that it is an estimate that can not predict final price. You see this in trades like engine repair where the business can give you a pretty good estimate of internal damage but can not predict the full damage until the engine is disassembled and inspected. In these cases the Estimate comes with a cost because work is required but once the inspection is completed the customer is faced with the final cost estimate that will be held to or the ability to take their disassembled engine and parts and pay $150 for the Estimate Cost.
In this case it is easy to see the difference between Estimates and Final Cost but unfortunately because Contractors and especially small and new ones have not gone through many fights with customers over costs then an Estimate that a Contractor gives is often seen as the exact final bill.
You might find yourself in court over a contract if you don’t force your contractor to spell out all of the details and just accept a price on the back of a business card so if the work is expensive or important you need to have a good contract written or just don’t do business with that company. The fact is a good contract protects both the consumer and the business conducting the work so there is no excuse to ignore this part of getting work done.