The Scam - Part Two

I mentioned the flurry of change orders that in retrospect was the hallmark of a scam. I figured that for some perspective I'd walk you through those changes, how they happened, and what we've learned from the experience.

On October 31, 2004, Contractor A gave us a proposal for the foundation job. That scope of work included obtaining municipal permits (in fact Contractor A would never obtain permits for any part of the job, but I'll talk about that in a later post), maintaining services in the house (because we would be living there), doing the foundation replacement according to the plans made by our engineer, removing the chimney, installing drainage and a sump that drained to the curb, reinforcing the walls under the back section of the house with the bathroom and laundry (which had formerly been a back porch), establishing the basement floor level at its existing condition (with a guarantee that deepening the basement to standing height would not exceed an additional $18,649.00 -- Contractor A was very big on extremely specific numbers that he seemed to pull out of his ass), and repainting any disturbed siding.

We had assorted reasons for delaying work; by late October we knew we would not be able to start and finish work before the rain started, and Contractor A, who was our preferred contractor at this point, had told us he would delay work until the water table receded. Also we had done a home equity loan to get the money for the work, and we wanted to wait until we had the money in hand to sign any documents.

On a change order mysteriously dated November 31 (but signed December 3), we paid Contractor A for "Preconstruction Services" -- namely, consulting -- to help us determine the cost of putting in a basement work room as an alternative to our planned workshop shed in the back of the garden.

We also signed the contract for the foundation work on December 3; or Noel did, as I was down south at school.

One December 6, Contractor A presented us with a proposal to install a gas fireplace, as we had asked him to do. We'd like to replace the original coal-burning fireplace in our front parlour (and the one up in the front bedroom) with gas direct-vent fireplaces. At the fireplace store in San Francisco, they told us to expect as an order of magnitude an installation cost of $2000 -- for plumbing and carpentry. The fireplace itself cost $2000, and $4000 was in our budget at this point. Contractor A presented us with a proposal to do the work for $13,015, which included $7,725 in labour costs. For a job that should take a couple days at most. We declined, obviously. I don't know how stupid he thought we were, but looking at that proposal I can see we should have been smarter and clamped down on him then and there.

The next change order was on January 19, after he'd begun trying and failing to dewater the site. This change order had several parts, of which we approved only a few. They were A) removing the existing cripple walls and siding on the house (replacing any damaged siding) for $3500, B) Replacing the old galvanized water lines with copper for $3927, C) Replacing the gas lines under the house with new pipe for $3051, D) Replacing vents and drains to code for $5626, E) Removing the concrete slabs up to the two parking spaces we wanted to keep for $3924, F) Rebuilding our front stairs for $5866, G) Repairing a rotted 4x6 at the front wall for $1333, and H) Excavating for a basement for $18,084. Of those, we approved A, part of C (because our gas lines leaked and had been impossible to repair), and G. Of those, A was the least legitimate, since the change was done to allow Contractor A to use mechanical excavators, rather than for any real benefit to ourselves.

Of the ones we didn't approve, I find the ones about replacing the plumbing and gas lines most interesting, since Contractor A would eventually take apart and make a total hash of reassembling our drainage, such that when the inspector walked on site he refused to continue the inspection until we completely replumbed the house (we only have plumbing in the back corner of the house so this was not the ordeal it would be if our upstairs bathroom functioned).

I'm also fascinated that removing a few square yards (and I mean in area, not volume) of concrete would add up to so much, given that at this point he was going to have mechanical excavators on site. But wait -- it will come back again.

On January 20, Contractor A presented us with an addendum to the change orders that mainly applied to replacing our old and leaking gas meter (it dated to the 1950's and had rusted out). We'd asked him to see what we could do about getting that replaced -- it was my understanding that the meter belongs to PG&E, not us, but he presented us with a change order to replace the meter that makes little or no sense:

What the heck does this change order mean?

I think that the cost he would have come up with there for the entire thing was $4770. We did want to move the gas meter into a hatch under the porch, but that would not require more than $1500 worth of rerouting of the pipes; the pipes are in the right place already. The good news is that we didn't approve this, and even better, a few months after the foundation job was finished PG&E finally came out and replaced the meter for free.

Other things on that change order were another quote for removing the concrete up to the parking spaces for $3924, $800 to rebuild the bottom front step that he had broken out (even though in the original contract, he specifically said he would not break it out, so having done so he should have replaced it at no cost to us), and $3420 to replace the planned columns in the basement with floor joist stiffeners. We approved the joist stiffeners.

There's another weird thing on this change order, and it's this note:

Contract modification by assertion

We have no idea what that is supposed to relate to: it's under the item about the joist stiffeners. But we assume, from later experience, that it was Contractor A trying to sneak contract modifications into the change orders.

On February 8, we got another set of change orders, this time one for moving the electrical subpanel to another wall for $1080, and repairing some rot under the side porch for $1490. We approved both of those, though we should not have approved the first one because a) it was not a change we wanted; it was to make the job easier for the contractor, and b) he completely hashed the job and ruined some really lovely wiring. God, I hope nobody else ever has this man do electrical work for them, because he's horrible at it.

On February 11, we got two more change orders. One was the removal of the concrete in the driveway, again, still costing $3924, and the other was the deepening of the project to include a basement, priced at $14,664. We approved both of those.

On February 19 -- in the middle of the time when Contractor A says he was working so hard on trying to save our house that he could not bother to notify us that our house was in danger -- we got another change order, this time to replace the waste and vent lines to code, for $5626. We approved that (and we should not, but that this point we were concentrating on getting the funding we'd gotten for the foundation to come through, and both of us were in the middle of crazy work/school commitments, so we weren't paying enough attention). We'd later have to have all the work replaced, as I said.

On March 14, we got the change order that tried to assert that we had been notified of water problems under the house:

Contractor A tries to scam us

This change order was something we'd asked him to work up before talking to the engineer about the conditions under the house, when we thought the issue was just a need for grade beams for lateral support for the walls. It has a lot of other, weird stuff in it, though. Let me show you:

Weird change order items

After examining it for a while, we discovered that it was part invoice, part change order. Some of those items are things he had finished and was billing us for, and some of them were brand new items that he wanted us to sign off on.

The man is a moron.

Even better, some of those items are things he should not have been billing us for, like moving the heating ducts, and some of them are assertions, like that he had removed our front step with our approval. And one of them I know to be a lie, which is 8b; he claimed to have made multiple attempts to get through to Public Works regarding our curb drain. I'll go into that in a later post, but suffice it to say that he made up a weird drama about the Public Works department that was completely unbelievable.

After that March 14 change order, we were much more careful about signing papers he presented us. He'd not wanted to leave without Noel's signature on the change order on March 14, and then on March 19 he gave us another extensive change order with this little note on it:

Why won't we let ourselves be totally scammed???

Of course it was "outstanding." It was a real issue for him that we would not let him assert his version of the story as truth, and sign it into a contract.

Another fun feature of this change order was how he began pushing Xypex on us. Xpyex is a concrete additive that is used to make concrete, which normally wicks water, into a watertight material. It forms a crystalline structure in the concrete that stops the wicking. Contractor A heard about it and -- never having used it himself -- was convinced we needed it in our basement walls.

You need Xypex

It would have been slightly more convincing if he had known how to spell the product name. And if he had any actual understanding of the effects Xypex has on concrete. Let's quote from the Xypex web site:

Concrete containing Xypex Admix may develop higher ultimate strengths than plain concrete. Trial mixes should be carried out under project conditions to determine setting time and strength of the concrete.

I've worked on projects that used Xypex -- it's used a lot in subterranean parking garages -- and it's good stuff. It activates when in contact with water and seals hairline cracks that form during curing -- it doesn't prevent them. You can sometimes see evidence of it in parking garages, where the structure is revealed, because as it contacts water it forms those crystals and changes colour. It's very cool. For the water situation we have, and given that our basement was never intended to be living space or particularly waterproof, Xypex would be total overkill, and keep in mind that I'm a big fan of overengineering.

Also: a couple months after we got this change order, I got a quote from our local concrete plant, and they would do a Xypex admixture for the amount of concrete in our project at the time of this change order for $500. And that was in the summer, with no discounts whatsoever.

The red line you see through this change order is for REJECTED. If not because we'd totally come to our senses, then because at this point we had no engineer approved plans, we had an appointment with the soils engineer for March 24, and Contractor A was still churning out change orders as if the project were not on hold.

There are more change orders from later in the process, but they related more to other topics we'll cover later.

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posted by ayse on 04/15/10

1 Comments

I'm also in the building construction industry - and this makes my head hurt! I know you're glad to have it mostly behind you, but it must be painful to be going back through it again! However, its very informative for us readers, so thanks for revisiting things.

Note: We're getting pummeled with spam comments, so I've turned off the ability to use any HTML or include any links for the time being. Email with any issues.

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