How do you handle a NON agreed upon price bump?

[Joe S.]

How do you handle price increase by your contractor that was not agreed to by both parties? If you have been rehabbing Houses then you realize that it is common practice for the contractor to try to do an add-on price hike on the final bill. So the scenario plays out like this when you get your final bill there is an add-on fee which was not agreed-upon or discussed. Now there are a few situations where a price increase could be justified, But open dialogue should be included in such a situation as well IMO.

P.S  My title should  read… How do you handle a non-agreed-upon Price bump. I cannot personally edit the title.😁 [Title corrected for you by Moderator Team]

[Mike Reynolds]

Originally posted by @Joe S.:

How do you handle price increase by your contractor that was not agreed to by both parties? If you have been rehabbing Houses then you realize that it is common practice for the contractor to try to do an add-on price hike on the final bill. So the scenario plays out like this when you get your final bill there is an add-on fee which was not agreed-upon or discussed. Now there are a few situations where a price increase could be justified, But open dialogue should be included in such a situation as well IMO.

P.S  My title should  read… How do you handle a non-agreed-upon Price bump. I cannot personally edit the title.😁 [Title corrected for you by Moderator Team]

 That would be a no (maybe). Unless you have a rep on site that approved it in writing with a signature. On our jobs we do that but only after prior approval by the super, PM or owner. 

If they were union, that should have reflected in the initial bid. Here is what I have seen the last 2 years since covid though:

Companies bid the work pre/post covid. 

You/bank/owner/architect take your time getting all approvals and start construction 10-18 months late. 

Contractor still wants your business and agrees to original contract (often to his detriment) 

Supply chain issues + inflation = a bad deal for sub contractor. 

Contractor has labor and supply issues due to short staff and supply chain stoppage. He has to hire out causing price fluctuations. Get different suppliers. 

Keep in mind that all of this is to keep you in good graces so they can continue to work with you in the future. Talk to them and find out what happened. You might work out something amicable. Maybe not. If they did complete the work in this era of impossible logistics, then maybe they are keepers. We have had soooo many issues like this of late. 200 million in projects this year alone and only one of the contractors did we have to "cut loose" on a permanant basis. A few are on the border line for sure but most have really stepped up to the next to impossible odds they have faced the last 2 years. 

But a contract is a contract. This is just food for thought for what you would do.