ch-ch-ch-change orders

Theme music for this post.

There are many four letter words associated with building, but none are as expensive as "change order". A change order is a deviation from the building plan that invariably adds cost (a change order could theoretically lower cost, but that seems to be as rare as a dodo hunt).

Change orders occur for a variety of reasons: An owner changing his or her mind about something ("I now need a Jacuzzi tub for four in the master suite."), the code changing during the build ("We're gonna need a bigger vent."), incomplete or erroneous construction documents ("How is this wall held up?"), sudden unavailability of building supplies ("We done run out of nails."), and building surprises ("Look out everybody: QUICKSAND!!!"). Change orders are a big reason for having a healthy contingency fund (or contingency plan [Adios, landscaping!]), because if there's one constant in this (built) world, it's change (orders).

We've had one big change in the project thus far: The foundation. Because of the unexpected shallowness of the sewer line at the street, we had to raise the foundation six inches. To our surprise, the builder ate the additional cost of this. You could argue that he should have checked the depth of the sewer line before setting the forms; however, you could also argue that (perhaps) the architects should have checked that as well (although to be fair, I'm not sure how they would have done that or if that would even be considered part of their job). Nevertheless, no charge to us for this change.

We've changed some of the fixtures from the original bid to the current time. Instead of this faucet, that faucet. Instead of this light, that light. These changes have varied in costing more and costing less. Clearly, we're responsible for these changes. We changed our mind; we (invariably) pay more for the changes.

Some other change orders are a little irritating because ideally they shouldn't have happened. For example, consider the cubist wall pooper. The original hard bid had a standard toilet. After seeing how well we did on the hard bid, we upgraded the pooper to a cubist one that hung from the wall. This was discussed at a meeting and added to subsequent versions of the fixture wish list. However, it wasn't until the drain plumbing was being installed before the foundation pour that we learned that it would cost an additional $600 to install the toilet. Understandably (now), it's a more delicate exercise to install an in-wall toilet. Unfortunately, that increased installation cost wasn't included in the bid, so it wasn't included in the loan. In other words, break out the checkbook.

We've had something similar happen with the HVAC system. All along we've been asking for a three-zone system. It was in the specs that went out for soft and hard bids. We asked about the zonage when it wasn't clear that it was in the sub's soft and hard bid. Finally, after asking umteen times, we find out last week it wasn't in the sub's bid and, even worse, it's going to cost an additional $2,000 (!!!).

So who's fault is this? Did the builder not convey the details of the system to the sub? Did the sub not pay attention to the specs? Did the builder not verify that the sub paid attention to the specs? Did aliens alter the space-time continuum and monkey with our build? Given that the builder has been good in the past in conveying specs to subs, given that the sub hasn't been terribly responsive or detailed, and given that it is currently unknown whether life exists outside of our planet (setting aside the unknown shiny things on Mars), Occam's Razor suggests this is a screw-up with the sub. You could argue that the general contractor is ultimately responsible, but I think all we gain from that is bad blood (and attempts to "make up the cost" in subsequent change orders). And if the sub is indeed responsible and we try to hold him accountable, all he has to do is bail on the bid. It's a problem without a clear solution (except for writing a check...).

Furthermore, I get the sneaky feeling that items captured in change orders cost more than if they had been part of the original bid. This article suggests this feeling is not without merit. That's doubly frustrating since we asked for these things either before bidding or before we went for financing. grrr... We're all human, so mistakes happen. It just sucks when the bills for those mistakes all come to you.

Sooo..... if you're building a house, we recommend that you (1) work out and confirm all those details before you go for financing (including verifying that the builder and subs include all your desired items in writing), (2) make sure anything changed after the hard bids come in are re-hardbidded, and (3) have a contingency fund because despite your best efforts you almost assuredly will have changes, surprises, and unconsidered booboos.

And pay attention to those details, because no-one else is...

Further reading:

Coping with Change Orders

Change Orders: The Good, the Bad, and the Ugly

Change Orders: The Bane of All Construction Projects

The Trouble with Change Orders

housewerk: cabinets, tile, loan, walls, contract, budgeting, permitting

cabinets

We visited with the Kitchen Craft lady on Friday and had a good, solid chat. She explained that when working with a builder/architect she's never worked with before, she's learned that that she needs to fit the specs to a tee, regardless of cost. Makes some sense since she doesn't know what the budget constraints are, if any. What we've learned through the bidding process is to press for details. If we hadn't pressed for the room splits (how much the cabinets would have cost for each room), we would have bailed on the Kitchen Craft bid (and it behooves bidders to note or hint at stuff in the bid that gets crazy; it can save the job!).

Anyway, we talked about why certain things cost so much (those $8,000 drawers in the living room...) and ways to lower cost but maintain style (including, at her suggestion, using IKEA in the laundry room). It also helps that her personal aesthetic leans heavily toward modern. She described her own modern kitchen in which she can add a splash of color with a large lemon (if she wants to). Based on the visit, we're keeping Craft on the list with details to be worked out later when we get closer to installation.

tile

Got our tile samples, and... (drum roll please): They ain't gonna work (boos from the crowd; someone throws a chair at Geraldo). The silver NeosTile, of course (of course!) is a go:

but we had already seen a sample and just wanted one of our own, so it doesn't count. But the Daltile just ain't gonna work:

It looks gorgeous, but we feared it would be too creamy, and it is. In fact, it's WAY more creamy than the photos above would suggest. And that top tile (with all that beautiful horizontal bidness going on) is HUGE! Like twice as big as I expected!

Back to the tiling board...

construction loan


Finally chased down some more details on loans from our bank to compare apples to apples to the "deal" our broker found. And we've found that the broker's deal is not much of a deal at all (sigh...). His recommended product is a construction loan at 6%. Our bank offers a straight up construction loan at 4.50%, a single close to 5-year fixed following by a 20-year float at 4.24%, and a single close to 15-year fixed at 4%. No additional closing costs for the single close over the double close unless construction goes long (attorney fees to extend), but their construction loans are (seemingly) fixed at 12 months, so that shouldn't be a problem. In fact, I think that works to our advantage: it gives us some flex time with the builder and, assuming everything goes according to schedule, gives us interest only for a few months before the full payment kicks in (with the extra money going towards house incidentals).

We're inclined to go single close, hopefully the 15-year if we can swing the payment. If not, we'll go single close with the 5-year fixed to 20 year flex and shoot to refinance before the note floats. The builder says that Mutual of Omaha has single close to 30-year fixed, so that's also an option.

Now we have to decide which way to go with the bank...

sound wall

The builder went out to look at the prospects for a sound wall. There's an existing retaining wall owned by the auto dealership that he said we could probably go up 4 feet on before having to get an engineer. But four-feet just ain't going to be enough. If we build our own wall, he says he thinks he can do it for $2,200 for the footing and then $6 to 8 per facing square-foot. So 70 feet by 10 feet (will need a variance for that...) by (scribble scribble) equals $6,400 to $7,800 for a wall back yonder. As the bride says, "We have to have it." But that's a chunk o change.

I'm scratching my head over the $2,200 for footings. Ten feet of footings for the Mies wall out front is running $890. I asked the builder about that (because the back wall would be 70-feet long), and he thought that was way high and would check into it.

don't fence me in

One thing I realized that is missing from all the plans and bidding, including the landscape plans, is a fence around the property. The builder allowances that out at $20 a foot. It looks like there's about 180 feet of fence, so that works out to (scritch, scritch, carry the 2...): $3,600. That's a decent-sized miss from the budget...

contract

Reviewed the contract the builder likes to use, AIA Document A101-2007 with AIA Document A201-2007 defining general conditions, the standard contract paperwork from the American Institute of Architecture. Looks fine.

budget

Sharpened the pencils and got the budget finalized (as final as we can get it at this point). We're still below our tippy-top, so that's awesome!

permitting

The architects are off and running on getting permits!

housework: good (and gooder!) news

Been vaguely busy on the house the past several days. Lots going on! Here's the latest stink:

• Met with the builder and architect to discuss the bid and path forward: The long and short of it: We're building a house! Our evil plan to design toward a spec house and then add gewgaws later worked wonderfully. Instead of being in a position of deciding what to cut from the house, we're in the much more pleasant position of deciding what to upgrade. Trust me: That's a much better place to be! What we need to do now:
• Sign a contract with the builder (one will be forthcoming soon after some budget adjustments).
• Start working on getting permits (the architects will take the lead on this...).
• Get a construction loan (preferably a single-close loan).
• Refine the plans a wee bit.
• Start building!
• Deciding what to upgrade:
• Because the non-storefront window bid came in higher than expected, we're going to price out storefront for the whole house. At the very least, we'll storefront the windows in the front of the living room and the door for the master.  
• Instead of feeding air into the HVAC system and creating a positive pressure, we're going to price out an ERV, a neutral pressure ventilation system where air is removed as it is added. The builder has put one in before and says it runs about 2 grand (less than the 4 grand I was thinking...).
• Putting in the cubist pooper! (O hell yeah!) Will need to put in a "false wall" for the tank. Builder has done one before, so here. we. go!

• Need to refine the plans a wee bit: We need to revise the electrical plan to include the speakers and surround-sound system (and make the other changes we need). 
• Landscaping: The landscaper has gone AWOL again, so if we don't hear from him soon, we're bailing on him. The builder says he can install landscaping at most likely a lower cost. 
• The bids: I don't think it's typical, but we requested to see the detailed bids for certain categories (HVAC, appliances, plumbing, cabinets) to verify certain things and get more information to inform design and material decisions. In response, the builder gave us all the bids. This was cool since it's neat (for me) to see the breakdowns. What we learned looking at the detailed bids:
• We wanted to gawk at the HVAC bid to confirm that the contractor picked up on the flex-duct-no-longer-than-8-feet rule. Can't quite tell if they if they picked up on this... We did learn that the system is a Bryant system (not a Carrier) with 18 SEER and that the bid includes jumper ducts (awesome!).
• We wanted to gawk at the appliance bid to verify that they had our cooktop (and to see why the darn thing was costing so much). The builder got two bids on the appliances, and he shared both with us. Half a year ago I visited with one of the bidders about the cooktop, and they did not want to talk to me about the cooktop (hence my suspicion on the bid). As it turns out, my suspicions were justified: Neither bid included the cooktop we wanted. Even worse, they substituted other stuff that was crazy high: $3,600 v. $1,500 for one bid and $2,200 v. $1,500 for the other. Looks like we'll have to order that top ourselves (if we can get it shipped to the U.S.; starting to wonder if that will be an issue...). Setting aside the cooktop, the $3,600 bidder had far better prices than the other, coming in $700 less (and they even included the garbage disposal!). In fact, we could get better prices online through Amazon than one of the bidders. So much for the builder discount... 
• The garage door is not the one specified by the architects and has no windows. Will need to discuss...
• The plumbing bidder (who is also the $3,600 appliance bidder) can get stuff less than I can online. Yay! Except for the tub (Boo!). They couldn't get the bathroom faucets, so they're not included in the bid.  
• Solved the problem on the 23K v 30K (really 31K) cabinet bid. The builder didn't include the drawers in the living room in his spreadsheet. Stop a moment and do that math...  That's right: 8 grand for 12 (shallow) drawers in the living room (not including the shelves above). Holy buzzing bug butts! There's gold in them thar shelves!!!

• LEGOhaus! I brought the LEGOhaus to the meeting, and it was a big hit (and a useful reference point as we talked about the house during the meeting). Camera phones were poppin', the architects were bopping', and the soup eaters were sopping'! The builder said he had been in the business for 16 years and had never had a client build their house out of LEGOs. Well, there you go. The architects were excited when we offered to leave the haus with them for a bit. They want to take some nice photos of it. 
• Speaking of LEGOhaus: We went to the LEGOstore a couple weeks ago to get the windows I got hoobled out of as well as a number of other random pieces and LEGO versions of ourselves. Hey look! There we are! CELEBRATING!!!

counter offer...

After receiving a(n apparent) counter bid from the Kitchen Craft folks of $30,000 compared to the presumed $15,000 required for IKEA cabinets, we sullied up to IKEA last weekend to take a closer look at their cabinets and a get a firmer quote. In the past, when I've looked at IKEA cabs online, they had a design program, but it required a PC (i.e., no Mac version). When we went to the store to talk to a sales associate last weekend, we found out that IKEA now has a browser plug-in with PC and Mac versions. Yay!  After plugging in an approximate realization of our kitchen (and finding that you can have 6-inch toe heights (yay!) and stainless steel kick plates (double yay!), we were quite pleased at the final cost: $5,000. We figure an extra $1,500 to $2,000 for installation. (Note that this is only for the kitchen and not the bathrooms and cabs in the living room).

The bride also found a quartz counter-top that IKEA sells that is the best we've seen so far, a pleasant fusion between the two countertops we've flirted with: whiter, grayer-bluer, with mini-mirrors. Nice!

Unfortunately, it doesn't seem that IKEA sells samples of its countertops. That's problematic when trying to pick out other stuff (like backsplash tile). Furthermore, the buy-by-the-square-foot countertops are not available online (to check out specs and whatnot). That makes things a wee bit challenging.

As it turns out, there's a wee bit of uncertainty about the Kitchen Craft estimate (lots of weeing going on...). The cover letter from the Kitchen Craft folks says 30K, but the bid, as entered into the spreadsheet, says 23K (and the builder swears he put it in right). In case yer not good at math, that's a 7K difference. And instead of a 100% premium over IKEA, Kitchen Craft could (just) be a 50% premium. We need to get that figured out, because a 50% premium may be worth it to get custom features instead of circuit-bending IKEA's cabinets to work with our kitchen.

Wandering around IKEA, we gawked lovingly at this wall cabinets:

Wethinks these may go well above the east wall lower cabs in the laundry room. In fact, we're thinking that room (that wall) could double as a bar area.

We also gawked at these affordable scalable wine holders:

For the pantry?

hard bid 1.0

We got the hard bid back on Friday. As expected, it's higher than the soft bid we got back in late March. Not fatally higher (thank goodness!), just hmmmmm higher. I figured (hoped?) it would come in no more than 10 percent higher, and that, indeed is what it came in at. However, 10 percent of a lot of money is a lot of money (10 percent of it, in fact). Nonetheless, we engineered some budgetary head room in our budget to accommodate upgrades and uncertainty. And it looks like it was a good thing we did so! Most of the increase is due to choices we've made in materials, appliances, lights, and HVAC. The builder's estimate of the base house appears to be right on the money.

As a (probably over)general aside, let me note that nobody knows your house better than you do. This includes the architect and the builder. This is not a grumpy jab at the architect or builder; it's just a statement of (overgeneralized)fact. This may be different (and probably is) on higher end design-build projects where the architect is involved in every detail, but for more modest projects, the architects haven't detailed everything and they and the builders are juggling multiple projects in their heads and on their drawing boards. It all becomes a jumble: Your house is in there somewhere, but things can get foggy. Unless you've completely delegated the design of every detail of the house to the architect, you need to pay attention to the details and review things closely. You're part of the team ensuring success! Now back to our regularly scheduled program...

The analysis below goes into much more detail than a casual reader would want to suffer. I include the details to show the more-than-casual reader (potential building homeowner?) our thought process, right or wrong, and lingering questions and issues. The approach: A line-by-line review using the headers in the budget to organize questions and comments. Since I'm horribly forgetful (and since there is so much to review), I have to take notes to organize. It also makes it easier to share here!

Points to ponder:

• I really like how the builder organized the bid. Not as much detail as I would like or need (more on that later), but still quite a bit of detail. He also compared this hard bid to his soft bid for each line item. It's nice to see how close he was in un-upgraded categories and to see what's causing the budget diversions. 
• Some details on the budget diversions:
• Earthwork and Drainage: No change
• Concrete: 4 grand higher
• probably due to Formula One
• Masonry: About 11.5 grand lower
• We substituted Hardie for some of the stucco
• Metals: No change (but still allowanced at this time)
• Rough Carpentry: Essentially unchanged
• Insulation: Unchanged
• Roof and Sealants: Essentially unchanged
• Openings (doors and windows): 12 grand higher
• Soft bid didn't include storefront doors (+2.5 grand)
• Windows (+9 grand) 
• Garage door (+2.5 grand)
• Finishes (drywall, tile, flooring, painting): 2 grand higher
• due to painting
• Specialties (mirrors, shower doors, appliances): 3 grand higher
• Cabinets, trim, and countertops: 17 grand higher
• 13.5 grand higher due to cabinets
• 3.5 grand higher due to countertops (greater area)
• Plumbing and fixtures: 2 grand higher
• plumbing is 2 grand lower
• fixtures are 4 grand higher
• Mechanical (HVAC): 4 grand higher
• Electrical: Essentially unchanged
• Lighting: Unchanged
• but none of our choices (which are higher cost) were bidded
• General conditions: Unchanged
• Builder's fee (a set percentage of the build): 3 grand higher
• Net increase: 35 grand; however, if we take out the upgrades from the allowances and whatnot (appliances, cabinets, fixtures, HVAC, garage door) the builder's bid was pretty much on the mark (2 to 5 grand higher depending how you split the hairs). Not bad. If you're sizing up how close the bids get, make sure you are comparing apples and oranges...

Some questions we asked [and answers we got]:

• Square footage:
• Why is it different (2,260) than what the architects have (2,372)? [turns out it's 2,281!]
• Earthwork and Drainage:
• Does the bid include all the site work (i.e., removal of trees)? [yes]
• Will the removed trees be chipped and used onsite? [no]
• What is the allowance for the wall for? (Is this for the Mies wall in the front or the sound wall in the back?) [still discussing...]
• Will this include removing the old sidewalk to the old house? [yes]
• Concrete:
• Why is the driveway still shown as an allowance (and unbidden)? [waiting for specifics from landscaping]
• Why is the city sidewalk still shown as an allowance (and unbidden)? [waiting for the specifics from landscaping design]
• Is the grasscrete considered in the bid? [waiting for specifics from landscaping design]
• Does the bid include the path from the driveway to the house? [waiting for specifics from landscaping design]
• Will it cost extra to throw some glass on the pad? [no answer yet...]
• Masonry:
• Is the Hardie included in the bid? [yes]
• Metals:
• When/how can we get a bid on the railing? [need a design]
• Roof and Sealants:
• Does the bid include the gutters as specified by the architects? [yes]
• Garage roof should be standing seam metal instead of that fancy-schmancy white stuff. [it is]
• Openings (doors and windows):
• Does the bid include storefront for the whole front of the living room? [no]
• What are the interior doors made out of? [solid core birch]
• Need to include specific specs for door hardware... 
• Finishes (drywall, tile, flooring, painting):
• What is the extra cost of smooth drywall vs. light orange peel? [smooth drywall is an extra $0.75 per square foot]
• Does the bid include wood for the ceiling of the living room and associated eaves? [believes so but will confirm...]
• Does the bid include wood for the art wall? [believes so but will confirm...]
• Does the bid include tile for the backsplashes in the kitchen and laundry? [needs to check...] 
• Specialties (mirrors, shower doors, appliances):
• Can we see the details of the bid from the appliance subcontractor? The appliance bid seems high... [yes]
• Cabinets, trim, and countertops:
• Youch!!!
• Does the trim cost use trim as envisioned by the architects? [yes, but using standard trim up the stairs]
• Does the countertop number include the countertops in the laundry? [yes]
• No casework in the powder... [yup]
• Plumbing and fixtures:
• Can we see the detailed bid from the subcontractor? [sure]
• What is "bathroom access"? [hooks, toilet paper holders, towel racks]
• Mechanical (HVAC):
• Ducted multi-splits? [nope]
• May want a higher-SEER unit... [OK]
• Can we see the detailed bid from the subcontractor? [yes]
• Electrical:
• Subcontractor bid doesn't include trenching? [nope]
• Central vac? [forgot; will add]
• Does the bid include the Kidde fire alarms? [yes]
• How would sound wiring/speakers work? Can we do it? [needs wiring plan] 
• Which switch and plug plates are being used? [Decora]
• Does the bid include "solar ready" readiness? [it's pretty much solar ready]
• Lighting: 
• Need to factor in our choices... [waiting on bids]
• What brand of cans? [waiting on bid]

So.... What are the next steps? I think the cabinet bid of 23 grand can be brought down to half that by using IKEA. The kitchen, bidded at 16 grand by Kitchen Craft, can be had at IKEA for about 5 grand (not including installation). The kitchen appliance bid came in seemingly high. The vent hood can be had for 1 grand less (to be fair the spec sheet listed the 900 cfm model instead of the 300 cfm model). For some reason, the sub has the stove/microwave/cooktop listed for $1,500 more than we can get them online (perhaps because of freight?). The plumbing fixtures come up for 2 grand more than we can get them online (installation? shipping?). Dealing with those four items would save us 17.5 grand (unless we're missing something...).  Changing the garage roof from that fancy-schmancy white stuff to standing seam metal should save a grand. However, our interior light choices are about a grand higher than what the builder has at the moment. And we don't see things on the bid like the central vacuum and doorbell. That stuff = $$$.

We need to work out the "division of design" between the landscape architect and the architect-architect. We were thinking that the architect-architect had already spec'd out and designed some of the hardscape (in fact, he did). We'll discuss in our face-to-face meeting when we discuss the hard bid. The landscape designer has pretty much honored the hardscape put in place by the architects; nonetheless, the builder doesn't know this (and we suspect he's had experiences where the landscape architect and the architect-architect have not seen eye to eye...).

Ultimately, I feel we need to get the cost of everything on the table before we make any decisions. At that point we need to decide whether we cut or expand the budget to accommodate our desires.

The most excellent news is: We have a house we can afford! Whoop! Whoop! Now it's just ironing  out the details...