The clients hired an attorney, who in turn hired an engineering inspection firm, who crawled over every aspect of the project and its paperwork documentation. Their report highlighted numerous incompleted items (which they deemed deficiencies) along with an opinion that the excavation work completed thus far had insufficient cost documentation and should not have cost more than $20,000.
Mark Signature also consulted an attorney. At this point he was waiting to be paid for completed work in the amount of $98,500 plus the excavation overages. The owners refused to fund the payment request. Work was halted. The paperwork went back and forth. Signature explained that the “deficiencies” were merely unfinished work. The framing would be fully completed and then inspected by the building department.
It was to no avail. The well was tainted. The Johansens fired Signature Custom Builders and hired another contractor to correct “deficiencies” and complete the project. The contract dispute entered the twilight zone of the legal system.
Who was to blame for this situation? In my opinion, both parties. Excavation work should never have proceeded beyond the allowance amount, and weekly cost updates would have kept the owner informed of how much was being spent. The allowance amount should have been broken down by work category and amount, along with quoting the excavation subcontractor rate of $125 an hour: $7,200 for utility trenching, $13,800 for driveway excavation, $9,500 for rock removal, $4,500 for exported fill, and $5,000 for imported fill.
Signature should have taken the Johansens’ comments about budget more seriously. Allowance amounts are always perceived by clients to fully cover the assigned expenses. The allowance solution in this case was insufficient and became a powder keg just waiting to be detonated.
Dennis A. Dixon is an author, contractor, and speaker with more than 20 years of experience in the building industry. He can be reached at dixven@aol.com.
