All Forum Posts by: Bri Sawyer

Thank you for the input @Roarke Van Brunt and @Chris Seveney!  That was my feeling as well. I have not received a single escalation notice from any supplier but I was able to get a variance schedule by month from the lumber supplier which showed virtually no net increase in lumber per item (some items up some down from the time of bid net was $49 different from last year to this year) so there must have been a significant increase in the amount of materials they ordered vs what the contract price was based on.   I have asked repeatedly for a breakdown at the time of BID (my SOV is not broken down by labor/ material ect)  and this is the response I got today:

"In regards to requesting our internal estimates for the original contract (SOV), those are nonconsequential at this point. What was estimated three months ago has even changed for us."  

Followed by: 

"The Change Order was formally issued yesterday and payment will be due next Friday (12/2/2022). We need to work out any other issues and make a plan for payment as soon as possible. I need to discuss payment with vendors and lay that foundation. This will help them plan and prevent them from trying to lien the property (when there is no plan, they get nervous). In the unfortunate situation where payment is not made, XXX and its subcontractors will halt work on the property until payment is made. XXX will not make payments to subcontractors during this time period and they have the right to lien the property pending payment."

Based on the helpful responses above looks like it's probably time to involve a professional. Thanks, everyone! 

@Kelly Reynolds

This is in Tenessee and the amounts they want are looking like they are going to be about 50-75% increase over the contract when all is said and done. Our contract closed in October of 21. 

The contracted amount for excavation was $15,428 and they are stating they are over by $5902- has been completed since May 2022 and I was notified this week 

The contracted amount for the foundation was $87,430 and they are saying they are over by $50, 693 for a total of $138,123- Have been over by $35k since May and the additional amount since September and I was just notified this week. 

The contracted amount for framing (3200 sqft) was $61,715 and they are currently over by $21,973.76 but framing is still in process and they say more is to come but they don't know how much it will be in total. They are also using their own internal labor and say that they increase the labor price to match what others are charging in the area. 

They are providing receipts to show what they have spent but not anything that shows that the material has actually increased from the time of bid. In fact, on the framing variance sheet provided by the lumber yard  they used there has only been about 1% increase from the time of our bid because prices were higher at the beginning of the year than when they actually purchased our materials over the past month or so.

Has anyone run into issues with a contractor trying to enforce a material escalation clause in a construction contract? 

 We have a turn-key build contract in which there is a clause that allows the contractor to pass on any increases in material costs over 7.5% to us the buyer. The Clause in the contract specifically reads " Contract Price is subject to change if anyone material increases
in price by more than 7.5% (Seven- and One-Half Percent) from the date of this contract. Buyer/Owner shall be responsible for the cost of
any increase above 7.5% (seven and a half percent)." 

We received a call from the builder this week that in foundation and framing alone they are currently over budget by $111k and need a check within 7 days. Upon pushing them for invoices they decreased it to $87k but said more is coming once the framing is complete.  Totaling a nearly 75% increase over the original contract amount to this point. The foundation has been completed since May and there has been no mention of overages until this week. There was no warning prior to them completing the work. 

Our contract is from Oct 2021. Upon reviewing the invoices the line items in framing the change in the net price of specific items is less than 1% from the time of bid to the price paid due to falling lumber prices.  Which would indicate to me that the builder was negligent when completing his initial bid rather than the increase coming from material increases.  Secondly, our contract does not have an escalation clause relating to labor so I don't see think that should be passed on to us. 

Has anyone else had something similar happen? What type of documentation would be required to prove there was an actual increase in the material vs mistakes made on the contractor's part? I want to be fair but I'm having a hard time grasping such exorbitant increases when my other projects are experiencing drops in material prices from this time last year.