Trouble on the farm with contractor

[MikePA]

I'd talk to a lawyer and, more importantly, the electrician and try and work something out with the bill (payment options, reduction, etc.). You signed a contract for them to 'do the main electrical hookups for the new barns and tie in the new electrical with the old and electrically hook up new poultry equipment and lighting.' at certain rates per hour plus materials. If they did this work, you owe them the money. This is the 'problem' with a time and materials agreement. BTW, your lawyer will bill you for his time and materials, too, and not charge a fixed price to resolve this problem.

You said you believe the time and material spent on the job, so there's no fraud and no one has been burned. All the electrician is 'guilty' of is being a poor estimator.

If you talk to a lawyer, you'll be paying double, or more, per hour what the electrician charged you and at the end of the day, you'll probably still owe the extra $77,000, unless the electrician reduces his bill.

 

[EddieWalker]

I don't think a lawyer will help you here, and agree with Mike that it will just cost you more money, and in the end you'll still owe the contractor what he's due.

What you need to be worried about is if he goes legal on you. He has a contract with you, he performed a service and supplied material. He's out allot of money and will need payment from you to pay his employees and suppliers. He's expecting allot of money from you and will take you to court for those fees, plus his legal fees and in some states, interest. This could get allot worse.

It takes almost nothing to put a lien on a property. If he puts a lien on your property, than you will be forced to either fight it in court (expensive) or pay him what he's charging you. This may affect your credit, your loans and your ability to stay in business. Worse case scenerio is pretty bad.

I would go over the bill very carefully and see if you can find something. One of the biggest reasons for overbilling is charging for hours worked when nothing is done. This is particular common for heavy equipment operators. You have to keep track of every hour they work, or you can get charged for maintenance, repairs and just sitting around . My electrician tried to charge me for having to go back to his shop for the right tools. His employee came out here to do a job and forgot some of his tools, then tried to put those hours on my bill.

I keep notes of hours worked and what they do for this reason. Allot of contractors sort of figure it out at the end and have no idea what hours were actually worked.

Materials have gone crazy. Get the materials bill and see if he's adding a profit to those as well. Some places require a special license to sell merchandise for profit that isn't covered under paying for labor. If he's making a profit on materials, his tax code could be totaly different. It's an angle, but not a good one.

Your bank should have a plan for some sort of unexpected fees and expenses. Talk to your banker about increasing your loan. They won't want to, but they are already into you for allot of money and they don't want to get tied up in a legal battle any more than you do. If you go to court, you won't be able to make your payments or run your business and could very likely default on the loan.

Good luck,
Eddie

 

[shvl73]

Call the office of your state Attorney General. They are already being paid out of your taxes. To me, this is a gross deviation from the verbal estimate and certainly fraud. Whether this meets the legal criteria for fraud is where the Attorney Generals office comes in. Since this is the second time (that you're aware of) this contractor has done this, I would say he's quite dishonest and you may uncover many more instances of consumer abuse perpetrated by this individual. Bring any and all evidence you may have, including your friend, to make a statement, if he's willing.
Good luck.

 

[DUMBDOG]

This whole thing smells. The estimate that he gave you was equal to the overage on your friend's barns on a per barn basis. He knew at that point already that he could not do the job for the price that he quoted you. Even at the point of the progress bill when he said it could come to 80k and it ended up being another 87k. No one that is in business can be that stupid and stay in business for very long.

The only way that he could do this would be deliberate attempt to mislead you on the costs to get the job.

On the flip side it could be a massive case of miscommunication. He might of been only quoting labor. When he said a total of 80K, he might of meant another 80K. Either way contact an attorney as this guy does not deserve the additional money either because of fraud or just plain stupidity.

 

[HappyCPE]

Eric, get ready for a fight. You need a lawyer, like it or not. Demand an itemized invoice for all labor and material. Then, analyze the estimate by checking the installation against it. Better yet, you and your lawyer need another estimate. PM me and I can give you some pointers. I HATE contractors like yours! This has fraud written all over it.

 

[gemini5362]

I would reiterate what I said before I would demand an itemized statement. If the time that he shows and the material costs were accurate then you are going to owe the money and he has a right to force you to pay it. I am a bit suspicious that when he had a month of construction left that he told you it would be 80k and then came in with a final bill that was considerably higher than that. He should have known by that time what kind of time frame the work that was left would take and unless he got hit with a huge price increase he should have known what the price for material was going to be. This contractor sounds shady to say the least but just because he is shady does not mean that he is not owed money and cannot collect it legally. I would check local attorneys. Some attorneys will give you free consultations. I would ask the attorney what their hourly fee is. A reputable attorney will have no problem with you asking that. You probably dont need to get the highest price attorney in town, sometimes you can do well with a new attorney ,they are hungry for work and their hourly rate is less than what you would pay for a more established attorney. You want to get this taken care of as soon as possible the contractor has a time limit to file a mechanic and material lean against you and he will make sure to do something legal about this amount of money within that time limit.

 

[Dusty]

Usually when a contractor has a large job like this, they get an estimate of the material costs from the wholesaler. That estimate / quote is usually good for a specific time frame.... such as 30 days. If the contractor knows that he has the job, then he will order the materials and lock in that price. Whether or not, he will pass those savings onto the customer is questionable. With a time and material job, usually the material invoice sheet are turned over to the customer to pay the amount billed, unless there is some agreement as to additional percentage that will be added to the cost of the materials. This is how it worked when I had work done. They made their profit on the labor, and I saved on the material costs. One contractor told me that he would have to charge me sales tax on the materials, so I just told him to have the supply house add sales tax to the bills. Each time he gave me a invoice for materials, I paid that invoice with a check to the supply house. That way, I knew that the supplier was paid and I didn't have to worry about a materials lien on the property. I, in turn gave those bills to the construction mortgage company, and they released that amount of money to me. They also required a lien release from the supplier. Different parts of the country operate differently, but this is how it worked for me.
Dusty

 

[Kubotasrking]

I think the advice to call an attorney is wise. Money well spent.

A problem you may have is that he told you initially it would be about the same as your friend's job, and it was. Another estimate would be good, and a big outfit in NW Oregon (I've seen them as far south as Salem), and WWash is Cherry City Electric. They should be able to provide some sort of bid on a project like yours.

I wish you well, but I think you have been fleeced by a pro.

 

[40Kchicks]

Thanks everyone for the replies. The two common themes in these replies are the same issues I keep debating over.

One, I agreed to pay for their time and materials plus profit of the job. I should have made them do detailed weekly reports and kept track of man hours on the job. Live and learn.

The second theme is they were completely dishonest and intentionally kept me in the dark about the total cost in order to get the most out of me they possibly could. That wasn’t right and they should be punished for this. Would a court agree with me, I don’t know.

Another angle I was thinking of was that they must have pulled the October 1st progress billing out of thin air. Most of the materials were bought at the start of the project(September), very little was bought in October and November certainly not 87K of extra labor and materials. If I could find out what was the charge for October and November and pay that plus the progress bill on October 1st for 50K wouldn’t that be right?

Personally I have never needed or hired a lawyer and don’t want to go that route but my wife is pretty adamant that we need to. I guess I’ll let her at least get some information from them and find out which way we should proceed.

Eric

 

[Robert_in_NY]

You can always look for another company and tell them your problem (don't mention any names of the other company) and see if they would come out and spec at least one building to see if they are close to the same price the other company is charging. If they come in at $20k per building it gives you some room to negotiate.