Asking advice how to deal with business dispute

[Dr. Green]

I have a business dispute with a prominent Winnipeasaukee.com advertiser. I should start by saying I'm reluctant to take legal action, so in your replies, please don't rush to suggesting "sue them", though it may come to pass if nothing else works.

I entered into a contract with a company to develop a project, and at the first meeting announced my budget for the cost of the project (different than the cost to be paid to the company to develop the project).

We worked on the project for several months (and the budget was repeated several times). Finally it was time to put the project out to bid, and the bid came in for twice the budget! I was shocked. I went to the lead developer and asked him how much he had anticipated the project costing, and he said roughly 2.5 times budget and he thought the bid was low. I asked why he didn't tell me this and he said he hoped the bidder (who he knew was a friend of mine) would cut me a sweet deal. In fact, the bidder did cut me a sweet deal (I asked) but that sweet deal was still 2 times the budget.

I paid my bills to the developer (I'm that type of person, honoring my commitments) and thought about it and requested a refund of half what I spent with the company (roughly $10k of ~$20k spent). I have received no reply (the request went in my very last payment, so I know they got it).

I was pretty devastated by this, and it took me several months to move ahead on a scaled down project (working with someone who knows my concerns about budget and is working closely with me on that).

I have learned of another person who had the same experience with the first company (project was way over budget and abandoned). This was communicated my a mutual friend (I don't know the other person personally) and thus is hearsay, but i find myself getting steamed up again, upset that there was absolutely no reply to my raising the issue of the company ignoring my budget in their development, and hearing they do this repeatedly (well, at least one other time).

I'm looking for responses that might have positive suggestion where to go with this. Rather than just try to destroy the company's reputation (tempting, but not my first choice), I'm looking for advise how to constructively engage the firm about this issue. I realize they have already indicated they don't want to engage in any discussion, but is other anything else you can think of that would be (or has the potential to be) positive and constructive, other that lawsuit or defaming them? (Is it defaming if my accusations are true?)

[BroadHopper]

I'm wondering if it is the same contractor I had a dispute with. I just kept it quiet and just PM anyone who wants to deal with the contractor.

[Yosemite Sam]

How many bids were rec'd on this project?

[tummyman]

You have a lot going on here. First you say you entered into a contract. Since we do not know what the specific terms of the contract were...cost, deliverables, etc. it is hard to pass any judgement. It seems they did deliver on a part or even whole of their contract since you apparently paid them the contract amount and it seems possibly a stretch to hold them accountable for a bid process that they have no real control over, although maybe they should have expressed their concerns about cost before it went out to bid. Let's say they told you in advance of the bidding that it would come in 2X the budget, what would you have done? Refused to pay them? Seems the first step is to read and negotiate contracts that are well spelled out to avoid interpretation issues at a later date. From my perspective, outing the company will serve no real useful purpose and may expose you to problems legally. Guess you might seek legal counsel to see if there is a material breach of the contract you entered into. If there is, then I suggest your lawyer write a letter to the contractor and his counsel outlining the concerns and seek a resolution out of court. Sometimes having their lawyer talk to your lawyer gets things done and keeps you out of the fight. I would not succumb to a public thrashing/bashing at this point...talk to an attorney first to see if your claim has any basis in fact. This is short of a suit, but maybe just the fact that you have engaged counsel may be enough to get things moving.

[Dr. Green]

OK, I see I need to clarify as people are not understanding what I meant (probably as I was deliberately vague). I tried to not identify the business, but that seems to have led to confusion.

I hired an architectural firm to design a house for me. I told them the budget for the project. They designed a house that would take 2x my budget to build. The architect said he thought it would cost 2.5 times my budget to build. I just got one bid from a contractor friend, but the architect thought it was lower than expected (though of course he said he "hoped it would come in close to budget, seeing as the contractor was a friend"). Did he think contractors don't need to eat? Just the raw materials were over budget not including any contractor labor.

The contract with the architectural firm was to have them design the house. I was utterly shocked when the house came in at twice budget, and even more shocked when the architect said he thought it would cost more.

I have heard of another customer of the same firm having a similar experience and abandoning the project when that happened (or abandoning it with them and moving onto a different architect). I moved on to a contractor with architectural software and am quite happy with both the design and the cost now. I went to an architect because I thought that is how one designed houses, but have learned it is just the most expensive way to design houses (the design was actually my own).

[Yosemite Sam]

Architect's Fee is usually @ 10% of Construction cost.

However when friends and relatives get involved, who knows what the final cost will be.....especially greedy ones who think that you are loaded. .

[BroadHopper]

Originally Posted by Dr. Green

OK, I see I need to clarify as people are not understanding what I meant (probably as I was deliberately vague). I tried to not identify the business, but that seems to have led to confusion.

I hired an architectural firm to design a house for me. I told them the budget for the project. They designed a house that would take 2x my budget to build. The architect said he thought it would cost 2.5 times my budget to build. I just got one bid from a contractor friend, but the architect thought it was lower than expected (though of course he said he "hoped it would come in close to budget, seeing as the contractor was a friend"). Did he think contractors don't need to eat? Just the raw materials were over budget not including any contractor labor.

The contract with the architectural firm was to have them design the house. I was utterly shocked when the house came in at twice budget, and even more shocked when the architect said he thought it would cost more.

I have heard of another customer of the same firm having a similar experience and abandoning the project when that happened (or abandoning it with them and moving onto a different architect). I moved on to a contractor with architectural software and am quite happy with both the design and the cost now. I went to an architect because I thought that is how one designed houses, but have learned it is just the most expensive way to design houses (the design was actually my own).

Sounds like a similar experience. Contractor was suppose to start in August and finish before the year is over. Started the excavation in August and didn't pour the foundation til December! Didn't start the framing til March. At the time I fired the contractor. New contractor no better. Suppose to start framing in March and didn't show up til June. As he started the framing it was not up to 'green' spec of RBC 2009. Gives me a run around that the state is at RBC 2004 and he can't do it. I fired him. The third contractor started in August. halfway through the building, he insist he needs an additional $100K to finish the project, a multitude of excuses like labor cost, lumber cost etc. I told him to give me the bill of materials and the labor details. No luck, so I fired him too.

That is when I bought software and spent hours putting the house in the computer. It was my girl friends design. The software updates itself to the latest RBC and is energy star labeled. I should have done this last year. Now with new specs and BOM, I sent out several RFQs. Only two responded with close quotes. The quotes will be similar if they were on the 'same page'. I picked the final contractor based on the reference check with prior customers and subcontractors I deal with at Lowe's.

During the final building the new contractor found flaws in the initial construction and foundation. I requested a new building inspector.

The new builder found ways to save money as I was laid off and not making the money I'm used to.

I'm not the only one. I have heard many horror stories of building gone wrong around the Lakes Region at Lowes. Seems like the contractors/subcontractors in the area are very lazy and scrimp on materials and try to add labor. Many do not want to work on a 'contract basis'. So they can call the shots.

My builder is from Southern NH and he offered a home owner's warrantee when completed. One local reputable builder says. 'He'll be out of business soon.' This builder been around since the 70's.

[Coolbreeze]

Call the contractor, speak with them directly--no email or voicemails- set a time to sit down and discuss your position. Listen to their side of the story. Tell them what you would like to heve or where you would like to be at the end of the meeting. You will go in 1 of two directions.
1. Both parties will come to a mutally agreed upon resolutuion to the problem.
or-
2. They will not entertain the invitation to a meeting or will deny any wrong doing and walk away. Your recourse, contact legal counsel and see what your options-vs-additional costs are.

You cannot slander this contractor nor can you pull in other peoples supposed gripes with this group to strenghten your cause.
Good luck.

[Coolbreeze]

Sorry about the spelling in the last post, my hands were frozen from the cold.

[Dr. Green]

Broadhopper and Cool breeze

I have no problems at all with the contractor. The company I have a problem with is the architectural firm for hearing my budget and totally ignoring it.

[Pineedles]

Facts in case as follows:

1. You hire an architectural firm to design a home for you.
2. You give them your plans for the home and a budget.
3. They design the home and put the contruction of it out to bid.
4. Bid price from friend comes in at twice the budget.
5. Architect "tells" you he thought it would be 2.5 times the budget.

Going forward;

1. Since the architect is probably salaried, the firm has no real out of pocket expenses.

2. Suggest that the firm reinburse you for all of their fees.

3. If they refuse ask them what they think is fair.

4. If they say anything less than 75% of the fee, you go to court.

[MarkinNH]

I think that if your serious about this, and you seem to be. You need to take the original contract, all other documentation and communications between you and the architectural firm, copy's of canceled checks etc.
Take Everything you have to an attorney, lay it all out to him and find out just where you stand legally.
Then, you can seek advice on how to proceed. You have alot of money invested in this. A few hundred more for the Legal Advice of a qualified attorney may well be the difference on what, if, and how much, you stand to recoup.
Nobody is going to step up and write you a check, just because the folks on this forum feel you were screwed over and are owed a refund.
Go See an Attorney
Good Luck

[Lakesrider]

So you go to an Architect...who should fully know the costs of building a house and the cost per sq ft of said house. I'd have to ask what they had to gain by designing a house so over budget that it would never get built other than bad press like this right here. But say your budget is $500,000. They designed a house that would cost $1.25 to $1.5 million to build and don't think anything is wrong with that? I certainly would out them and never use them.

So yeah now you have a bunch of plans for a house that will never get built? Man another business I got to get into....
"Oh you want a small cottage....well here are your plans for a Taj Mahal....Now pay up!"

However I have to ask where were you in the planning stages? Did you not get to see what they were designing and go over costs during those planning stages?
I would have been wanting to see the design plans almost daily to see what was being developed before it got out of hand to the tune of 2-2.5X the allotted budget. If you wanted one thing and they were giving you something else, it should have been seen early and stopped post haste.

Good luck with it all.....Lawyers, Attorney General's Office....I would say this is fraud.
Taking money for something you did not ask for...Fraud.

Now off I go to get my Architect license.....

[Newbiesaukee]

This is probably not the best place to discuss this issue. I am usually fairly logical but I do not quite understand the sequence of events (I am also neither an attorney,contractor,etc.) My confusion is that in the contract with the architect was there no mention of the amount in your budget or some limitation or dollar amount or was your informing the architect of your budget solely verbal?

[Pineedles]

Of course all of us could be just getting our minds exercised by the OP and it is a non-event? I'm not offended, if it is.

[winnipiseogee]

Having been involved in litigation in the past I think suing people is a waste of time, effort and money and ultimately gets you nowhere. The last time I had to sue someone it was black and white that I was owed $10,000. The judge agreed but allowed the person to pay me $75 a month for the next 14 months. Of course out of that I have to pay legal fees of almost $6,000.

In my opinion anyone that suggests that you sue is doing you a disservice.

That said, I agree that the situation sounds pretty ridiculous. I've built 3 homes recently and I find it pretty common for the cost to be 20% or 30% over budget. 2 or 3 times the budget is insane.

I know most of the architects in the area and I'm not really aware of any of them being unethical. I suggest you call the firm and insist on speaking with the senior most person. Explain reasonably and rationally exactly what happened and why you are so disappointed. I'd be very surprised if they won't try and work out a reasonable solution with you.

That said, if it turns out that they are jackasses I say go ahead and post there name on the forum!!! If they are screwing people over you owe it to your fellow forum folks to let us know so we don't taken advantage of!

Finally, if you are interested PM me and I will give you the name of the people who have designed and built my homes. They are amazing, have a great reputation and are really good about working around a budget.

[Lakepilot]

The way I read your (OP) second post, it was your design that you bought to the Architect. You wanted the architect to then prepare all the plans suitable for presentation to builders to get a quote. Did the architect not express concern when they saw your plans and you told them your budget? Did they tell you you would have to pare down the plans or it was likely to cost much more?

If you had gone to an architect and told them to design from scratch a house for x dollars then you have a reason to be mad. If you went to an architect and told them to do the plans for my design, you have a problem.

[Sidewinder]

I'm usually a lurker on here but I thought I would chime in here.

I work for a design build construction firm in southern, NH "no plug needed" and I'm a project manager and I also do Autodesk 2008 AutoCAD drawings.

In these days we have more clients coming to us for design/build services as its my more cost effective to have a construction company design, draw, estimate and have a structural engineering company do a peer review on the project rather than Architect.

This practice will be come more common as it saves the client thousands of dollars, in your case a budget number would of been established prior to drawings based on size and materials and a plethora of small details a very good estimate should have been established.

I have worked on houses, churches, industrial buildings, commercial buildings etc. saving the clients a substantial amount of architectural services.

I have done some side work for a structural engineer that works with the business your dispute is with, the firm seem to be very upstanding its a shame they are not even responding to you.

Good luck in the future and don't be afraid to use a reputable design build firm in the future.

[Dr. Green]

Originally Posted by Lakepilot

The way I read your (OP) second post, it was your design that you bought to the Architect. You wanted the architect to then prepare all the plans suitable for presentation to builders to get a quote. Did the architect not express concern when they saw your plans and you told them your budget? Did they tell you you would have to pare down the plans or it was likely to cost much more?

If you had gone to an architect and told them to design from scratch a house for x dollars then you have a reason to be mad. If you went to an architect and told them to do the plans for my design, you have a problem.

The plans were mine, and I told the architect our budget, and he continued to design for 4 months before saying "get a quote". I had no idea what building costs were and assumed that he would tell me if the plans were more than my budget. Though I was astounded that after all those months of work, and $20,000+ in fees, that the building was at twice budget, I was even more astounded when he told me he had expected it to cost even more.

He did say that some of the details could be pricey and add to the cost, so I was prepared to see it cost 1.2 times budget, even 1.25, but not 2x, or the 2.5x he estimated. So, no, he did not say "I think this is way over budget", at most he said some of the features might push the cost up.


Newbiesaukee
There was no specification in the contract of the budget because the architectural firm was just the designer, not the builder. It was my own naivete that most professional people would be honest, a naivete similar to that, I imagine, that led many to expect that FRM was a decent place to put one's savings. I only lost $20,000+. I'm writing all this as I feel ripped off. If I was misleading someone in a similar way, I would consider myself a criminal, even if I did not actually break a law, as I would have betrayed their trust.

Pineedles
I did tell them why I thought it was unfair and asked for 1/2 of my payments back. They did not reply. I don't understand your later post about a non-event. I spent $20,000 and got plans for an unaffordable (for me) house while I had clearly stated my budget. It was devastating emotionally.

Sidewinder
NOW I know about the ability of contractors to design, but when I started, I thought only architects did that. Given that I brought the design, which the architect embellished and improved, I now realize I could have gone to a designer, or contractor that designs, (which is what I'm doing now) and had a good experience, like I'm having now.... But I didn't know that then.

I'm now in mid-construction of a house that is around my original budget. I've gotten rid of the garage and apartment, the rounded walls, the balcony roof, etc. Its smaller, but big enough for my needs. If I'd known earlier those things were going to add so much to the cost, I could have dealt with them then, but the architect did not tell me that until I got the estimate and was frantically trying to reduce my costs. But by then, I had lost faith in his integrity, or another way to put it, his concern for the happiness, well-being and success of his client. Interestingly, I still like the personality of the architect, I just would recommend anyone to do business with him.

[ApS]

If the design you took to the architect was a "green" design, you should already know that such design requests are not particularly familiar to local builders, and would be costly.

1) First, I would have a local attorney write a letter demanding (as only an attorney would do ) repayment of what you think is owed to you.

(Cost? Less than $200)

2) Second, to save on attorneys' fees, I'd then take the architectural firm to "Small-Claims Court":

In most cases, it'd be a waste of time, but a "Small-Claims Court" claim should cost you less than $20, and would expose the defendant to public exposure (in the press) and embarrassment (in the courtroom).

You won't recover 50% of what you've already "lost", but in any settlement that would result, you might recover enough of your ill-spent funds to expand somewhat on your present construction.

[Lakesrider]

Sorry...Just my opinion...but right here is where I think you are screwed.

"The plans were mine, and I told the architect our budget, and he continued to design for 4 months before saying "get a quote". I had no idea what building costs were and assumed that he would tell me if the plans were more than my budget. Though I was astounded that after all those months of work, and $20,000+ in fees, that the building was at twice budget, I was even more astounded when he told me he had expected it to cost even more."

Needed to be way more proactive......

[BroadHopper]

I learned the hard way and this is the advice of my lawyer. If you are planning on a large expense project, have a statement of work in writing and signed by both parties. It's the only way to cover your a$$ in court!

[BroadHopper]

Put all of your current drawings into an architect software. You will be surprised how much you can do on your own. You can even make major changes and it will tell you how much it will cost or save.

Don't be afraid to do it yourself.

[SAMIAM]

I agree with MarkinNH.....you've already blown 20K. Why not get the advice of a good real estate attorney just to see where you stand? For a few hundred bucks, at least you will know if you have a good case or you're wasting your time.
Hard to believe that any legit biz would not sit down with you to listen to reason.

[Heaven]

As a side note, you are unlikely to get the same quality of design work from a design/build company as you are from a reputable architect (possibly excluding a design/build firm that has its own architect). My opinion is based on my work, where I see both types every day.

[jmen24]

Heaven makes a solid point. It is not always the case, but is true more often than not.

If you work with a Design/Build firm, you should ask if their general liability insurance company knows that they do Design/Build and ask for proof that they do. Most of the time you will be surprised by the results of that question.

Dr. Green, I have worked with the company you are having this issue with, on more than one project. They provide some of the nicest design in this state, but they are always over budget.

The thing that gets most people in trouble when working with an Architect is that they do not get a builder involved until the design is complete. Architects do not order materials, manage man hours on a project or have any idea how to actually build a house ( a couple do, but most do not, I have met and worked with 1). Mainly, they have no idea what actually goes into building a design that they create. Remember, Architecture is a degree in contruction Theory, not in construction.

Having a builder perform Budget Reality Checks during design is very important to keeping the customers goals and budget in mind.

I am not sure what recourse you are going to have other than to stop into their office and discuss this issue with the owner. I know that their contracts are very clear in what you are going to pay and what you are going to get. I can have them start a design on a house tomorrow that I never intend to build, but I will still have to pay them for this use of manpower and experience in design.

Their contract will legally prevent them from having to refund your money. This is down to an ethics and honor issue, you are going to have get your money back, by pleading for it.


I strongly recommend that you do not threaten to destroy their reputation as a way to try and get your money back, it will more than likely backfire on you, especially if you plan to sub-contract for any major building player in your demographic. That is just my advice, from one business to another, that is never a tactic that pans out the way you would dream it will.

[jmen24]

Originally Posted by BroadHopper

Put all of your current drawings into an architect software. You will be surprised how much you can do on your own. You can even make major changes and it will tell you how much it will cost or save.

Don't be afraid to do it yourself.

Don't do this. Plans are engineered with life safety in mind. Just changing around a design without knowledge of why things are laid out is what gets people killed. Degrees in Architecture and Structural Engineering exist for a reason. Start from stratch if you want to, but do not change an existing design.

Plus, a dwg or dxf file will not fully convert into those cheap over the counter programs that "spit" out a price. There is a reason why real design and estimating software costs $1,000's of dollars and not $150 at Staples.

Not dumping on you Broadhopper, but as a professional in this industry, this is some really dangerous advice.

[ishoot308]

Dr. Green;

Jmen24 has given you solid advice.

In hindsight (which is always 20/20) I would have taken your over budget design and sat down with your original Architect and do what is called "value engineering". Basically cutting out the fluff or living space until your project is within budget. I have been involved in commercial construction for over 25 years and this is standard operating procedure on almost every job I have been involved with. I would think the same holds true for residential work in some respect.

Good Luck!

Dan