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Question DetailsAsked on 9/8/2015

A contractor sent us an invoice for time spent on a bid. Am I obligated to pay him?

We "hired" a contractor to do our remodel. When his second estimate came back much, MUCH higher, we told him we no longer wanted to work with him. Then he sent us an invoice for his time spent on the second bid.

We had a conversation about getting a more accurate bid for financing and he said that since our financing was not solid, he would charge us for his time. We never agree to his charges (this was all done through email) and said that he misunderstood and that our financing was solid. He came back and said he understood now and that he would come out and do another estimate. We never signed anything or put a deposit down or anything. He came back with a bid 30% over the original. At that final cost, the project no longer made sense and we didn't trust him any more. And now we have an invoice for $1100.

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3 Answers

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Since you "hired" him and he specifically said he would charge you for his time to do a more detailed estimate for the financing, evenn if the need for that was predicated on a misunderstanding, THAT was your time to either stop the second estimate or to tie down and agree in writing to a maximum or flat amount for that service - which WAS a service to you, because he had already done an initial "free" estimate.


I think a significant part of the problem here is your unfamiliarity in dealing with contractors, and maybe not knowing the difference between an estimate and a bid or of the overall bidding process, since it sounds like you committed to one contractor without any competitive bidding. Granted, GC's like it that way because they have no competition on the job, but likely to cost you more and competing bids also tends to force you to tie down final design BEFORE bidding rather than after, which makes for a much "cleaner" contract because it then has a firm and hopefully fully identifiable (except for specific named selections to be made in progress, like colors or specific flooring model or such) scope of work.


I doubt you would win in a court of small claims, and since he did perform a service for you, he has a right to place a lien on your property if you do not pay him - which would call a sudden halt to hyour financing and construction ! Best you could do, as I see it, is negotiate the cost - but assuming he spent a few hours on the "free" initial estimate using "ballpark" or "rule of thumb" numbers, and then did a deliberate takeoff for the second one for about 10-15 hours at $75-100/hour (decent billing rate for a GC) would be reasonable for that, because he probably got quotes from subs and materials suppliers as well at that time, and/or accomodated changes in your design or plan. He may also, if you did not use one beforehand, have brought in an architect and/or structural engineer for some deliberate design of roof framing and such and any other unusual or structural details.


A detailed estimate or bid 30% above a rough estimate is not at all unusual. Though many theoreticians claim a final bid should be within 10-15% of a rough estimate, that is pure hapchance if it is, because your project contingency is usually at least 10-15% alone. It is VERY unusual these days for even deliberately designed and project managed jobs to come in within 20-30% of an initial estimate, and commonly (look at all the government boondoggles out there like bridges to nowhere and decades-old incomplete interchanges and sewer jobs and roads and such) come in 100-300% over initial estimates because of unforeseen conditions or the inevitable owner additions between the rough and final design stages. I have worked a LOT of jobs where client changes alone more than doubled the job cost, NOT including any factors beyond the contractor's control like extreme weather or shipping slowdowns or supplier failure to deliver on time or undetected geotechnical conditions or such.


Your primary mistake was probably in going with "estimates" and committing to a specific contractor before getting competing FIRM BIDS from several contractors (perhaps after an initial "discuss the project" site visit by each prospect) on a specific design - which would normally (though not always) be free.


My gut feeling is you were flying without an architect here, who could have shaken out the initial plan and do the redesign from conceptual to final design with you as part of HIS work BEFORE talking seriously to general contractors. A plan and specs which you will likely still need to get building permits, and should be done BEFORE a remodel bidding process so you have a basis for apples-to-apples comparison between bids, which same plans and specs then become the basis for construction as an attachment to the construction contract.


I would say suck it up and pay - not worth what it would cost to fight it, because just getting an attorney on board and writing a letter or two for you will cost you as much as you are arguing about. And your distrust of him, unless a "gut feeling" related to being uncomfortable with being around him (which should then have shown up earlier in the process), may not be justified. Remember, this second estimate (which would probably become his project plan) probably would have been or could have been negotiated to be free had you gone ahead with him, but you can't expect him to put in significant extra effort beyond an initial estimate without compensation - either direct pay, or in the form of him doing the job.


However, going back and deciding to go with him would depend on HIS feelings - if you do not have another contractor committed already, and explained you did not understand the "estimate" versus "bidding" process and that his second estimate would cost so much, he MIGHT agree to work with you on the job - or might just as likely see you as a difficult client and be happier to take the $100 and walk away.


If he is charging you for it, except for confidential info like specific names of the subcontractors or vendors he planned to use or such, you should receive a copy of the detailed bid and any drawings or plans or designs that were worked up as part of it, and perhaps you can roll these into your prep cost for the job and include them in the financed amount same as an architect's fees would be.

Answered 3 years ago by LCD

0
Votes

Several corrections...we did work with an architect and got four other bids from contractors. Each contractor got a detailed packet and to scale drawings (7 pages). Nothing changed from the first to the second bid in the design. Nothing.

Answered 3 years ago by Guest_94057152

0
Votes

OK - bad read or assumption on my part - sorry.


However, since you said you "hired" him and then asked for a more detailed or accurate bid for financing and did NOT tell him NO, we do not want to pay for it, since he said he would be charging for his time and delivered the product (even though there was some confusion), I still think you are on the hook for reasonable reimbursement to him at fully-loaded (including overhead and profit and such) billing rate for his time and any direct costs with normal markup.


By comparison, HAD you told him his bid was not acceptable - in $ or detail - and that if he wanted to be considered for the job he needed to rework it, then if he had said it would cost you you would have probably said no at that time - but since he was already "on board" you did not specifically reject that, so I would say that makes the difference - he was already "your contractor" so he is due fair compensation for his time and efforts on your job. Granted, with a proper signed contract this would (or should) have invoked a change order situation but you were too early in the process to be thinking that way yet.


All I can recommend further is maybe to explain to your architect (if he does not already know) what happened, maybe let him read this question and answers as backup, and ask what he thinks. His opinion should be fairly independent unless he had recommended that particular contractor to you in the first place. He may also know the contractor and be able to discuss it with him (with your permission) and get some of the $ knocked off, especially if the contractor is someone he deals with a lot. Or maybe, if you are amenable and not committed to another contractor already, he may be able to smooth things over and get you back on track with that contractor, perhaps with reduction or elimination of that fee.


Another possibility, especially if an AL listed and high rated contractor, and if you are a Premium member, is AL dispute resolution.


Good Luck - and remember in the future - Written contract, and ALL changes or approvals or such IN WRITING.


One other consideration - depending on exactly how things went - you might technically still be in eitehr a written or an implied contract with the first guy - hence at risk of him claiming lost income and/or profit on the job for you dropping him. Architect might be able to give a read on that, depending on how in the know he is about the relationship - or you might need an attorney to hash that one out. If you are not already formally committed to another contractor, I would hold off on that till you are sure the first contractual relationship is put to bed, so YOU are not in breach of contract.

Answered 3 years ago by LCD




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