Ever see “The Book of Questions”? I always likes the little ethical or moral or just curious questions they posed. Things like, “If you knew you were going to die at the end of the time period, would you rather live a perfect month with every pleasure imaginable or live two years broke and sick?” or something like that. It’s in that vein that I post this addition to the ongoing series of curious situations I encounter. Curious to see how different people here think it should be addressed.
A builder introduced me to a prospective homeowner. A design was done by someone else but screwed up. I’m asked to redesign according to builder’s parameters for size, shape, simplicity, etc. Came up with something both liked. Builder prices it out, and it’s higher than owner wants to go by maybe 20 or 25%. It prices higher than another one I designed that was priced by this builder, and that one was larger and more complicated, so I was pretty much thrown a curve. The explanation is that he was giving that other guy a huge break for some reason or another, and this one reflected his proper pricing.
Client ain’t gonna go for this price. Tonight we’ll talk more, but he’s either gonna have to put it off for a year or three, or cut size/scope more than he’d prefer.
Builder’s spent some time on site visits, plan review, estimating, but has no contract with client to cover those costs. (I’ve talked with him about things discussed here, but he weren’t listening to lil’ ol’ me.) My contract is with the client.
I know one or more builders who are pricing things to where the client might be able to get exactly what they want within their budget. Haven’t mentioned this to anyone involved.
What to do, what to do? My commitment is to my client and I want to see them in their house. But I also don’t want to stab the builder in the back, and trust me, he’d be resentful and I can see why.
So who here has the wisdom of Solomon with a solution that is win-win-win? The closest I can come to that is seeing if the original guy would operate as GC or supervisor only and sub all out to one of the guys who seems to be pricing cheaper, but I worry that his supervisory fee would take away all the savings.
Replies
Cloud,
did u contract to do a design or do a design that would come in at a certain estimate? the second part complicates the matter because that implies u know what builders to ask for bids (or pick)
even tho the client doesn't have a contract with a builder, there is a relationship. why did the client pick that builder?
u seem to be in a niche (domes) where there is a small number of builders and designers. that adds interest.
who picked the original designer?
as i remember your other post, this is the builder who won't listen.
maybe u need to make it clear what your role is (designing for the client) and how far that goes in determining the price/cost, and who is responsible for that. like "the builder u chose is responsible for coming up with the cost. I design to your requests/wants and will work with your builder and u in design changes to meet your budget."
bobl Volo, non valeo
>"the builder u chose is responsible for coming up with the cost. I design to your requests/wants and will work with your builder and u in design changes to meet your budget."
That's clear to all, I believe. No one has me on the hot seat (except me). And I don't contract to design to a certain price, be/c every builder is different (just went through bids that ranged from 113k to 243k for the same spec!!!) and there is no way I could guarantee what a builder would price it out as (or account for something like the OSB increases). So I'm in the clear......except......I want the client to get their house, it likely ain't gonna happen with this builder, but if I tell the client how they might get it done, I've pulled the rug out from under the builder, and that's not how I like to operate. Of course, designing stuff that doesn't get built is not how I like to operate either.
Can't say if it's the same builder or not, but I have gotten a few apologies out of that one recently. Client picked builder for regional convenience. Builder picked original designer for same reason.
I feel bad for client....more than a year later, and after 10 months of being run through the wringer by the original designer, they now get a price that is beyond their means. They know I'm willing to do whatever design they want. What they currently don't know is that they may be able to use their current design as is.........and it's up to me to tell them or not tell them, and so far I don't like the consequences of either choice.
Edited 11/17/2003 1:20:48 PM ET by Cloud Hidden
What would the builder say if you said,
"You know this house isn't going to get built--because the Smiths can't handle that price. And I know you can't build it for less, without giving up your profit."
"But I know a couple of other builders who could probably bring it in at a price the Smiths can handle. I would never try to cut you out of a project, but the way things currently stand, it looks like the house isn't going to get built, anyway.
"Is there any way we can work this out so that the Smith's get this house, at a price they can afford?"
Ya know, if they don't build it, he's going to get squat, the same as if someone else builds it. And if he builds it at the lower price, he's losing money.
Get him to think it's his idea to back out, perhaps with a payment for time spent.
K-
-
"Bad golf is played with the shoulders and the body; good golf with the hands." -- Gene Sarazen
Sounds to me like one of those situations where there simply isn't a good outcome available no matter how hard one searches. From what you say it sounds like it's the builder who is the main problem. I think you are ethically entitiled to ask your clients if they have considered any other builders, and if not then suggest they do. If they feel bad about ditching the original guy then it is up to them to pay him off for the time he has put in so far
John
been thinking about your conundrum while cleaning out a the shed - - it would be possible to lead the HO around to where he asks the question/has the epiphany, this would allow you moral high ground, but I'm sure the distinction would be lost on the builders part - -
you sure on the $ situation with the HO? - - you sure the builder really wants this job? - -
You have a contract with the client, and you have a relationship with the builder. Also, the builder introduced you to the client.
Without stabbing the builder the only pure way I see it is to wait for the deal to fall apart. When and if it does, and if they ask, you can provide that other builders might be able to build your design within their budget.
Regardless of how the clients get around to asking you (if they ever do) about other builders, at some point I'd still throw the first builder a bone and let him know that the clients are shopping around. Preserve that relationship.
If the clients do go elsewhere, it's really up to them and the first builder to work out compensation (if any) for work that the first builder has already done on the project.
Well CH it does sound to me like your caught between a rock and a hard place on this one. It's only number 348 for you? That's good. I'm in quadruple digits on my list of ethical dilemmas.
It's water under the bridge now but why wasn't this project done with a genuine Design-Build methodology? You and the builder as a TEAM.
Well any my 2¢....
"Builder prices it out, and it's higher than owner wants to go by maybe 20 or 25%. It prices higher than another one I designed that was priced by this builder, and that one was larger and more complicated, so I was pretty much thrown a curve." It wont help you with problem but you have to do something to start to get a handle on what your project designs are going to cost. What kinds of records do you keep now that you can draw information from? Have you figured out what the key parameters are that drive the prices are in your projects?
"and that one was larger and more complicated" Does more complicated have to do with the dome aspect or other something else?
"The explanation is that he was giving that other guy a huge break for some reason or another, and this one reflected his proper pricing." I don't know about that one. That sounds like it could possibly be builder speak to cover for "I didn't really have any idea what I was doing with that other project but now I do and I know this is what I really need to charge" and even that might be tinged with a touch of "I also have to make up for what I gave away for nothing the last time I did a dome" mentality.
Also smaller SF doesn't necessarily work out cheaper at all. In fact generally speaking as the SF decreases the cost per SF increases (see The Hidden Dangers of Square Foot Estimating). Aside from the pure mathematical explanation it can sometimes be more expensive too since the efficiencies of set-ups,scale, and/or flow are lost too but then again sometimes "small batch sizes" are a lot more efficient too. Not being familiar with the processes in building a dome I can't comment accurately or professionally on your cases more specifically.
"Tonight we'll talk more" Who will talk more? You and the client or you and the builder or you, the client, and the builder. Just my opinion and point of view but I think it should be you, the client and the builder so the three of you can work it out to your mutual satisfaction.
"Builder's spent some time on site visits, plan review, estimating, but has no contract with client to cover those costs. " That certainly was naive thinking on his part.
"I know one or more builders who are pricing things to where the client might be able to get exactly what they want within their budget. Haven't mentioned this to anyone involved." Hmmnn I could also interpret that to mean " I know one or more builders who are pricing things where they are willing to lose money doing this kind of work but it would at least have a chance the client getting what they wanted."
"What to do, what to do? My commitment is to my client and I want to see them in their house. But I also don't want to stab the builder in the back, and trust me, he'd be resentful and I can see why." Yeah I'd be furious. Especially if you did anything behind my back. I think the three parties need to work this out together.
"So who here has the wisdom of Solomon with a solution that is win-win-win?" Sorry but I can't help you with that. No real answers here. But, and this is a big BUT... any equation that includes a lose is a loser period. Lose-Win-Win is still a loss as is any other combination with a "lose" in there. I think the key is in this sentence somewhere---'he's either gonna have to put it off for a year or three, or cut size/scope more than he'd prefer." I got to drive a top of the line Land Rover the other day and I decided that it was the vehicle I absolutely want to have, but you know what? I am going to have to wait a year or two before I can afford something like that.
On another but still related note.... I just got this months Wall & Ceilings magazine....
View Image
I justpicked it up from my mailbox a few minutes ago so I haven't read it yet but the article is called Rock it Like a Hurricane- with a subtitle saying From Utilizing new technology and architectural design, everyone involved in the project considers the dome home to be the next building trend. I just checked it isn't online yet so do you get Walls & Ceilings or am I gonna have to scan this for you?
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
I know that house well Jerrald. Same engineer did mine. Know one of the builders well. I just signed up for W&C.
Not doing design-build be/c builder doesn't wanna do it that way--don't know his reasons--and I don't wanna get involved with anyone's money but the client. I think he'd actually prefer that I run all the money and contracts, but that ain't gonna happen. I don't want to risk the chance that ANYONE will be able to come after me for money, and I don't want anyone sitting be/t me and the client.
As for which builder's cost is more righter, I think this one is a question of their chosen markup, and I don't have any opinion on how a builder should compute their fees. The costs on the dome side are pretty clear--I can calc the foam, concrete and rebar pretty tight. Labor might vary by experience. Labor rates depend on the builder. Markup is personal to each builder. On this house compared to the prior, the allowances for electrical, plumbing, hvac, kitchen were all higher even though there was no obvious basis for that in the design. Same complexity, smaller size, larger absolute cost. I think it was just a decision on where he wanted to price it. I can get all the handle possible on material costs, but if a builder ups margins from one job to another by whatever amt and doesn't let me know, I'm not gonna be able to guess. This guy has the experience, so nothing in the design took him by surprise. As to the other builders, what can I say? I know guys who operate well at $36/sf (for the average shell), at 45, and at 55. Only diff I can tell is their provision for overhead/markup, be/c material costs are gonna be the same. And in each case they've been doing it for years and years.
I get what your saying but I don't think the difference between builders is JUST in the markup. Just the other day on JLC I asked this one fellow there how long it takes him to build a particular stair part (a decending volute parapet cap) and he said 30 hours. We build the same part and we figure 10 or 12 hrs and I also know ours is what most people would consider the "better" part too since our is solid and and his is vertically laminated.
There is plenty of variation in labor too especially where different process techniques are concerned.
I really do think the contractor in and pricing methods really just by refining their guesses without really studying or finding the root causes as to why one project made money while another one didn't.
A least in a genuinne Design/Build scenario your are (or should be) getting real time price feedback as you go along with your designing process.
"I know guys who operate well at $36/sf (for the average shell), at 45, and at 55." Square foot of what? The foot print? Living Space?
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
>A least in a genuinne Design/Build scenario your are (or should be) getting real time price feedback as you go along with your designing process.
I don't argue that. I work with many different builders though, and each of them likes to just handle their own business. This is one case where it is what it is. Couldn't talk them into it even if I wanted to.
>"I know guys who operate well at $36/sf (for the average shell), at 45, and at 55." Square foot of what? The foot print? Living Space?
Floorspace, assuming hemispheres, be/c a hemi is twice the floor. Same as quoting prices/surface sf at twice the sf. Good builders know what a hemisphere will cost them. Travel and gory details extra.
How about this? You pay the builder a finder's fee for introducing you to the client, less than a sales commission but more than a tip. Maybe it covers his out of pocket costs, maybe it doesn't, but it's enough to let him know you haven't just abandoned him. (Some people might see this as an unethical kickback. Maybe it would depend on disclosing it to the client.) Then you remind him one last time that if the client doesn't build, he (the builder) doesn't make any money. Then you tell the client about the other builders you know who might be able to meet his budget. The client gets his house, you get the client's good will, and the builder at least doesn't feel p*ssed on.
If the builder is resentful later, even after taking your money and knowing that he had a chance to influence the design closer to the client's budget, then maybe that knowledge about his personality is the only useful result you get out of your interaction with him.
>You pay the builder a finder's fee
Not a lot of profit for me in paying a builder. The design fee just ain't all that great.
I think maybe your builder is trying to find the line.
You know, the one where you push the price. Trying to figure out just how much "supply" can eke out of "demand's" wallet, before going too far...
Normal business. Handle it in a normal business like way. Do what Ken-one-putt suggests.
Once you have done that, if it becomes an imbroglio... Do as Mongo suggested, step back and let the two of them duke it out. Take the action that Ken suggested, but don't become the middle man on this price negotiation. You are just the designer, let the customer and the builder work out their end of the shtick themselves. At worst... in the end, you'll either redesign, or work with another builder.
Live, Love, Forgive and Forget
Quittin' Time
>but don't become the middle man on this price negotiation
You and others who are saying much the same thing are what's resonating. It's not my prices or even my design that's the issue. There's a disconnect between what the client wants and what the builder they contacted has offered, and this and world peace are just two of the many problems I cannot single-handedly solve.
Iv'e read the posts from the other and was hoping to see another side of the coin, at least in my perspective.
I worked on a home in southern calif that was published in alot of the local magazines and newspapers during and after construction. I also did work work for other interior designers and they usually marked up my work about 20%, which seems typical. Once this one home had gained alot of notoriety, some of the other designers started to introduce me to their clients as "the guy that did the interior and cabinetry work on such and such a home." What I found out later was that I was not getting as many of the bids as I had before and I didin't change my method of pricing. What I did find out later was that two of the designers were adding as much as 40% to my bid and still charging for the design work that was included in my existing bid. They basically wound up charging in excess of 50%, and this I know as a matter of fact this various input from other people. It all came down to my "reputation" on a previous job that they were no part of.
In seeing your work published in various magazines, could this be a similar situation?
Interesting perspective. One I never thought of. I'd be flattered if someone thought they could get better margins just be/c of my involvement, though in this case my take is that the builder would think it's _his_ involvement that justifies the fee. :) Heck, and maybe it does. Like I said in another answer, I'm not gonna decide what a builder should charge.
This may be resolving itself. Client told me tonight that he simply isn't gonna be loan approved for the amount the builder bid. He has just learned that. He told me he was gonna see if there were options that fell within his approved range. I'll follow his lead.
This may not apply to your situation, but here's my free perspective (valued at what it costs!):
As a real estate broker I come up against many contract questions. The first and most common advice I give (and that often doesn't occur to many who you might think would know to do it) is to look carefully at your contract and see if the issue is addressed in any way in that contract. I understand that in your case it may simply not be addressed.
In real estate matters it often comes down to who, if anyone, is owed a fiduciary responsibility. If you have any sort of agency relationship (or if such a relationship can be construed from your contract) with your customer, then all considerations must be given solely to the customer. Trying to "be nice" to somone who is not your customer may be socially correct, but still the wrong way to go.
Another thought (learned in a terrific set of tapes entitled The Secrets of Power Negotiating by Roger Dawson) is that you lose your power in a negotition whenever you stop being willing to walk away from the deal. Being ready to walk away from a negotiation will often improve your level of happiness as well as the level of respect you get from your customers.
Good luck with this. Sounds like it may work out without you doing anything, IMO always the best solution.Any jackass can kick down a barn, but it takes a carpenter to build one.
if only the builder in question would offer to the client in question a possible solution in the way of a different builder that may do it for less in order to build experience/resume. if only that builder might think that the client may arrive at that conclusion himself and to save goodwill he could suggest it. if only that builder could be made to think, in the course of a casual conversation, that it was he who came to this brilliant and chivilrous conclusion. i wonder how a possible conversation might go, that would give this builder the idea for a solution, and the idea that it was he who had arrived at it? what is to gain from reccomending someone else for a job that you yourself do? how can one benefit in business with such an attitude? where is the profit?
on occasion even i will do the right thing, if i might possibly benefit from it. even if its just the goodwill of the opinion of others in some instances.
there is always a way, its just a matter of finding the path. and as Carlos Casteneda would say "travel the path with the most heart"