Don't forget that you can sell the house if it doesn't work out. 

Just trying to work out the logistics. 

Arbitration is more likely to work out partially in your favor than the roll of the dice in small claims court.

I've had properties in the past needing the sewer line dug out due to cracking etc.. so floated the idea of knocking all of this work out at the same time but at the moment only interested in doing the water lines.

You need to get the entire scope of work out of him, or his replacement BEFORE you even think about moving forward on this project. 

This may be hard hard for me since I an intending to stay in my primary residence for the time being and financials for down-payment mayn't work out.

The math just dosn't work out. 

I was curious how the numbers work out if its a house with a basement versus a house with concrete slab..

I'll go back to my suggestion for role playing, if you ever hear Chris Voss interviewed he almost always has at least one role playing session with the host.

I’m going to try to re-run the numbers just out of curiosity (based on Grant H Willcott’s response) to see how close it would get, but I predict this might be a deal that might not work out in my favor at this time.