Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
The The Only Constant Was Change
As annoying as the phrase “Oh, while we’re at it” can be to deadline oriented contractors, change orders can be a lucrative part of any job.
As annoying as the phrase "Oh, while we're at it" can be to deadline-oriented contractors, change orders can be a lucrative part of any job. But nothing could have prepared brothers Bernie and Mike Sublette, owners of Sublette Bros. Construction, for the number of changes they faced in the house they remodeled for plastic surgeon Bill Nunery and his wife, Vicky.
Perhaps the most succinct way to describe the situation is to point out that the preliminary ballpark estimate for the job, based on a walk around the house and Bill Nunery's description of what he wanted to do, was $350,000. The final price was nearly $774,000.
The project started simply enough. An architect with whom the Sublettes had worked referred them to clients for whom he was designing an addition. The 1960s tri-level house was typical of Sublette Bros.' target remodeling market: older homes in established Indianapolis-area neighborhoods. (The company also does new construction of custom homes priced at $300,000 and more).
|What started as an addition turned into a whole-house remodel that changed a 1970s-style tri-level (below) into a cottage-style home with a three-car garage, a new master suite and extensive exterior work (including landscaping). The project included many upscale details that give the finished house a distinctive look.|
The two-story addition to the back of the home would include a new kitchen and dining area, a family room, a bathroom, a covered porch, a daylight basement and a three-car garage. The plan also called for transforming the attached garage into a master bedroom, incorporating the existing kitchen into a new master bath, and painting and recarpeting the rest of the 2,500-square-foot existing house. It was just the kind of thing the Sublettes had done many times in their company's eight-year history.
As the project progressed, however, it grew in size. For example, after work had begun, the client saw a picture of a house he liked, so he decided to add to the front of the house a bump-out similar to the one in the photograph. By the time the project was finished, the client had had enough ideas for changes that the Sublettes had had to strip just about every wall to bare studs. Other little "while we're at it" outcomes were a new roof for the entire house; all new hardwood floors instead of carpet; replacing the old aluminum wiring; and new windows, insulation and plumbing throughout the house.
The Sublettes prefer to use time-and-materials contracts. "They reduce our risk," Bernie explains. They do fixed-bid, as well. With those jobs, the Sublettes use the American Institute of Architects' change order form and have clients sign it.
At the time of the Nunery project, however, they handled changes on T&M projects simply by confirming decisions about changes in a letter to the client -- a procedure the Sublettes are re-evaluating as a result of this job.
The Sublettes explained repeatedly to Nunery that his changes were running up the price of the job. In no time, it had exceeded their control estimate. The constantly shifting sands made it difficult to get a firm foothold on where the whole project was headed.
Perhaps the Sublettes should have become suspicious about what lay ahead when Nunery fired the architect. They were left with plans that lacked many of the details usually included. Nunery had had relatively minor remodeling done on his former house, such as adding a sun room. The contractor who did that work completed it without an architect's plans, and Nunery expected the Sublettes to do the same despite the much greater scope of the new project.
At the Sublettes' insistence, Nunery finally hired a designer, who paid scant attention to traditional plans and conventions. Instead, the designer sketched out his ideas -- usually on paper -- and handed them to the Sublette superintendent, Mike Hasler.
"When we were in the trim stage, I asked Mike if he was done with a particular detail yet," recalls Mike Sublette. "He said, 'No, we just got the design.' I asked him where it was, and he said, 'Over there,' and pointed to one of the walls. The designer had drawn his idea right on the drywall!"
The brothers still marvel at that incident. "It's a good thing we got the detail finished before the painters arrived, or they would have painted right over the design," Bernie says with a laugh.
|The new kitchen in the addition provides plenty of room for entertaining.|
By that time, the Sublettes had already been through a lot. Shortly after the Nunerys' previous home, which had stood on the lot next door, was destroyed in a fire, the couple bought this house and wanted to remodel it before they moved in. Bill Nunery visited the job site several times a week. As the job neared the trim stage, Vicky made frequent visits, too, adding her ideas to the mix. The problem was that -- unbeknownst to the Sublettes -- the Nunerys were having marital difficulties. Whenever Vicky came up with an idea, Bill nixed it on his next visit.
"He'd say, 'Nope. I'm running the project. Don't pay any attention to anything she said,'" Mike Sublette recalls. "Then the next week, when we'd finished whatever it was, he'd come back and say, 'Well, maybe we'd better do it her way after all.'"
Mike Sublette's first inkling of trouble ahead came early on, when the crew had finished putting in the subfloor for the addition. The plan called for brick facing on the part of the foundation that was exposed above the sloped grade, so the crew built the subfloor to allow the brick facing to be tucked under it.
"No sooner did we get the subfloor on and cantilevered out for the brick than [Nunery] decided he wanted the brick to go all the way up," Mike Sublette says. "So we had to cut back the joists and redo the band board to let the brick come by. Seemed like every time I went out, something like that had happened."
Both Sublettes can recite a litany of similar changes. The kitchen window was installed at least three times before Nunery was satisfied with its position. "He couldn't decide if he wanted the window centered on the wall inside or centered on the wall if you were looking at it from the outside," Bernie says.
Other notable additions and changes requested by the homeowners included:
"He'd come out every day, look at a detail we were doing, and either approve it or not approve it," Mike Sublette explains. "He'd say, 'Build this, but don't go any further until I can come out and look at it."
"Then he'd get tied up and couldn't come out, so our guys would be jumping all over to work on something else," Bernie continues. "Then he'd want to see that, so we'd have to pull everybody off and go do something completely different."
There were frustrations for the homeowners, too. Bill Nunery says he wishes there had been a schedule of deadlines for various decisions that had to be made. "It would have been nice to be able to look at that on Monday to see what I had to provide and what decisions I had to make that week," he explains. "It's hard getting a call the night before and discover they needed the information in the morning. They may have told me about it three months before, but I didn't remember it."
Both Sublettes developed a deep respect for Hasler during the project. Bernie recalls many phone conversations with him, convincing him to return to the job the next day.
"He's young, and a green stick bends easy," Bernie says with a laugh. "He wasn't experienced enough to just throw up his hands and say, 'I'm not doing this anymore.' He did a good job."
The importance of a paper trail
|The new family room features custom woodwork around the stone fireplace, which serves as the room's focal point.|
Bernie carefully documented every change in letters to Nunery. One two-page letter listed 25 changes the client had requested in just the past several days. As the project drew out, tension and frustration grew. In fact, Sublette Bros. once tried to delay further construction on the project until it had the information it needed. The contractors had poured the foundation and were ready to start framing but still didn't have plans. "When I told Bill we were going to work on another job nearby until he got the complete plans, he became extremely irate," Hasler says. "He said that his project should be our first priority, and we should keep working on it."
"So we had a heart-to-heart with Bill," Bernie says. "We told him, 'Look, we're just wasting your money.' He said, 'I don't care. I just want it done.' He gave us a few answers to the questions we had, and we put people back on the job. But soon we were in the same old routine."
By the time the project was finished, more than 18 months had passed -- three times what the Sublettes had expected it to take. Two-thirds of the way through, Nunery withheld payment until he "reviewed" the billing to make sure the charges were legitimate. He also questioned why the project was taking so long. Bernie responded with a 61-item list of changes his firm had had to accommodate, including delays in delivery of finish materials ordered by the Nunerys and salvage work at their former house.
To add insult to injury, Nunery balked at paying the final bill, which included unpaid balances from previous months. He claimed that the "young and inexperienced" superintendent had not done the work as efficiently as a veteran would have. The Sublettes ultimately knocked $20,311 off the bill just to get the rest of their money and close the books on the job.
As a result of the difficulties plaguing the project, the Sublettes now insist on more detailed plans before starting a project, with specifications right down to the paint color to be used. They also "strongly encourage" clients to involve Sublette Bros. as soon as they start working with their architect, Bernie says. "If we can be part of the planning, we can help the homeowners stay within their budget. We can tell them up front how much everything will cost."
Even though the project cost much more than Bill Nunery had expected, he says he is quite pleased with the result. He concedes it probably would have been cheaper to build new, but he calls the house very comfortable and enjoys living in it, although he lives there alone (he and Vicky separated before the house was done). "I've had many compliments on my home," he says. "The Sublettes did a terrific job."