Would you cut corners here?

27 Replies

This is going to be a wall of text, but I think it's necessary to lay down proper context.

Not so recently, I took a job for the rehab of a house. I had to wait a little bit since I don't want to put anybody in the hot seat. For context, I've only put together an LLC to work as a contractor full time Less than 3 years ago. You could say I'm rather new to most things though I've paid my way through college as a subcontractor in a rehab crew or make ready's if you would.

In this particular project, the scope of work included upgrading the 16 space panel to a 24 space one. First thing that I got concerned with is that the investor rehabbing doesn't want to upgrade the panel. My electrician is adamant that the 16 space panel won't be able to accommodate the circuits if we were to wire the house properly. I went ahead and took some off of the profit that I was going to make and paid my electrician to do the upgrade. Since I'm trying to foster a relationship with this investor, I was willing to eat up that cost. 

As my electrician did the upgrade, we encountered Romex wires spliced with electric tape behind the walls and hidden in soffits. There were also wires that went through the return air vent. There were 2 receptacles hidden inside a bathroom wall, and one of the bedrooms had a receptacle on the CEILING right at the corner where the wall meets the ceiling. Think about that for a minute. 

Having seen it, I wanted to do a change work order to get them addressed. The investor and his project manager did not want to address it. I was instructed to leave things how they are and that if it worked before for the previous homeowner, it should be fine. 

The electrician and I decided that we can't leave those behind and went ahead to address everything that needs to be done. We ended up rewiring practically the entire house and adding two ground wires. The house is a 4/2 fully furnished basement 2500 sq ft. My electrician wasn't happy, but we do things how we're supposed to do it. I ended up earning less that $2k to GC a 5 week project not including the time to put the contracts and sub contractors together. And all that electrical work for under $3k(?!) including the materials. 

Question is a.) would you just leave the problems unaddressed? b.) how would you have handled the situation? 

@Ashton Astillero  - I have zero to very little experience with construction contracts, but it seems you would want to have something in there that if issues are found that are not up to code, you are required (?) to fix them, and a change order will be issued. You did the right thing by not cutting corners - but you shouldn't have to eat the cost.

Where any permits pulled? Were they required? It would of most likely have been found if an inspector was to inspect opened walls and major electrical upgrades.

They avoided having permits pulled. What happened is that the inspector saw something unrelated to the electrical. He saw that the sump pump was discharging into the sewer so he flagged as much as he can. Were the permits required, yes. Were the electrical upgrades and rewiring required? Yes. And yes the inspector would have seen everything since we did quite a bit of demo and we wouldn't have been able to fully cover the 3 circuits that were routed through the return air vents.

A few things, as it sounds like you didn't approach this project formally enough:

1.  Did you have a written, detailed scope of work that indicated what you should be doing on the project?  If so, what did it say about upgrading the panel?

2.  Did the owner get an inspection of the electric service and run load calculations to determine whether the existing panel would support the upgrade?  If not, was there a discussion about what would happen should the panel not support the upgrade work?  If the SOW is calling for electrical upgrades, part of the discussion with the owner needs to be about whether those upgrades will affect other parts of the project (like the panel) and if so, what will be done.

3.  I'm assuming you're pulling permits on this job (at least I hope so, based on how you've described it).  If that's the case, you and the owner should have discussed that -- should any items be found that are not up to code -- you'll need to fix them.  Not only would you be required to by law, but you'd be opening yourself up to liability by not fixing them (if you hid the problem from an inspector).  

If you had done those three things above, there wouldn't be any question about how you would approach this work.  My recommendation is to go back to the owner and explain that -- by code and by law -- you need to repair the things you've found (at least somebody needs to repair them), and then ask the owner how he'd like to proceed.

I agree @Brad M.  . Yes, I shouldn't have to eat the cost. But at the time, with basically no projects under my belt as a GC, I saw that cost as a small fee to get a jump start to build a reputation for me and my crew. 

Lesson learned: put clauses on your contract that will address unseen circumstances. 

Would you have done it if it means it was gonna blow your budget for the rehab? 

I like to think I would have done the same thing in your situation @Ashton Astillero  . It would be tough to cut corners on a job knowing that you are leaving the property in a potentially dangerous situation.

If you can't do things the right way and make money, you probably want to work for a different investor.

been trying to @ mention you @J Scott and it just started to work

The project did have a scope of work. Though from what I'm getting is that I didn't write more specific lines with regards to upgrading the panel. 

No. And no since they didn't want to upgrade the panel at the first place. The original SOW didn't call for electrical upgrades, but we needed to reconfigure the kitchen circuits are they re-did the kitchen layouts and added and island. The previous panel was overloaded as per my electrician hence he wanted the upgrade. And there was no conversation regarding as to how to deal with code violations. Still begs the question in my head though: Do you continue to work with investors that wants to hide things like this? 

Permits had to get pulled as the inspector found other stuff. They paid for the permits and the extras, so I don't get why not pony up the few dollars ahead of time and not deal with a failed inspection. 

Lots of lessons learned in that project. 

Originally posted by @Ashton Astillero :
Still begs the question in my head though: Do you continue to work with investors that wants to hide things like this? 

Permits had to get pulled as the inspector found other stuff. They paid for the permits and the extras, so I don't get why not pony up the few dollars ahead of time and not deal with a failed inspection. 

In my opinion, you do exactly what the owner wants done, and not worry about cutting corners unless:

1.  You are doing something that the inspector will not pass;

2.  You are doing something that will endanger future homeowners;

3.  You are doing something that will create liability for your company; and/or

4.  You are doing something that will hurt your reputation.

If it's not doing any of those four things, then just give the owner what he wants.  If you are being asked to do any of those four things, you should refuse and let the owner know that he's going to end up getting himself in trouble at some point.

Just my $.02...

@Ashton Astillero

"Since I'm trying to foster a relationship with this investor, I was willing to eat up that cost."

I think you now know you don't want anything to do with this investor.  You know for sure he will shove you under the bus if anything were to ever come from leaving the electrical the way it was. Trust me my friend..you don't foster anything with that investor other than distance between the two of you. 

With that said, you did the right thing and you can sleep well at night.  Just set out your expectations in the next bid proposal so you and the investor are on the same page and if the investor disagree's, then walk and look for the next project. You don't want to try and live with the consequences of stepping over a dollar to save a dime.

I agree with @Guy Gimenez  . 

Find a new investor to work with if he/she doesn't care for quality and safety. I would focus on finding an investor that has the same mentality as you do .

The last thing you want is to find yourself in court bc some issues came up and the investor blames you even though you addressed the issues and he wouldn't do whats right. Also when issues happen from cutting corners it will come back to who did the work and once again it will ruin your name and business name. 

Chose an investor that isn't in it only for the money but cares about the reputation and safety of everyone.

@J Scott Well I hit all of those 4 unless clauses so… haha

@Guy Gimenez I agree with your point. But that was one of my first whole house rehabs I've ever taken on as a GC. Would you sign a $25k contract with a GC that practically has 0 track record whatsoever? I wouldn't. I got the contract thanks to a referral of a friend so not only was my reputation on the line but also the friend that referred me. I don't see this as any different as doing your first deal and breaking even. You might not have cash as ROI for your time and money, but as a contractor, I can't just make up track record in order to get more business for the contracting side of my business. Thanks for the input and will watch the relationship very closely even more.

Wow. (I am not an electrician ) However, I do see a huge issue on the top of the old panel where there is a yellow and white wire going out there is nothing keeping it from rubbing on the panel itself.( I don't remember what those clamps are called)

Can you say huge safety issue.

@Ashton Astillero  You did the right thing by fixing the issues, because you would be responsible had you covered up the found electrical issues. It seems that this investor either didn't think he should have to fix the issues, or knew he could get you to do it for free. Either way, that's not someone you want to work with again. I would also be worried that they didn't want to pull permits on the work. In my state, you can't do anything electrical without pulling a permit.

Out of curiosity, when was the work done? Are you not required to protect the circuits with AFCI's in Indiana? In WA, as of this last July the majority of circuits are required to have AFCI proctection and prior to July we were required to protect just bedrooms with AFCI. I'm not seeing any in your panel, which makes me curious...

@Sam McPeek   My electrician mentioned that they do that for most new construction homes that he works in. But I haven't heard any announcement nor amendments regarding the switch to AFCIs for remodels. The inspector OK'd this panel so that's good enough for me. 

@Ashton Astillero  That's interesting. I'm always curious about different states adoption of code. Over here in WA, they would make us update if we were doing a panel upgrade. I can tell you that, while I don't have any issue with the added protection, I don't like the added cost. Those AFCI breakers are about $40 each!

Also, I am running into an issue while wiring up my garage apartment in that my subpanel doesn't have enough open circuits. Luckily, the panel has the ability to use mini-breakers. I don't know if that old panel would've been listed to use mini breakers, but it might be something to check out on future projects. It could help avoid having to change out a whole panel.

@Ashton Astillero  I think others have stated not to work with this investor and I agree. He told you to do something that was illegal, do you think he would admit to it if it caused a fire. Hats off for doing what was right. Next time pull a permit,and look into the Indiana Home Improvement Act. You will change the way you do business for the better. All that said BP members now know you wont cut corners, network with those in your area. Best of Luck

Originally posted by @Ashton Astillero :

been trying to @ mention you @J Scott and it just started to work

 Still begs the question in my head though: Do you continue to work with investors that wants to hide things like this? 

Very simply, MY answer to this is: no!  I would not even consider working with this investor again

As the GC on the job you have to do the work according to code.If God for bid something will happen in the future ,like electrical Fire ,it's your liability you did the work.

Just my .02

Also, never agree to act as a GC without making the pulling of permits your job, and covered within your costs.  Putting yourself on the hook for unpermitted electrical work is nuts.

@Ashton Astillero   - This is a very tough situation for a young contractor, especially if you're not licensed.

Basically, you had a house that needed (and it sounds like, got) a rewire... and the investor didn't pay for it.

Let me give you a hard truth: He doesn't care that you came out of pocket, and you have done nothing but indicate your willingness to pay to come to work. You have no ingratiated yourself to him, and your actions on this job say nothing about whether or not he'll hire you for the next job. All that has happened here is that you've paid to go to work... in essence, you have taken money from your pocket and put it in the investor's pocket and gained no relationship points in the transaction.

You should have let the inspection fail, then told the investor "This has to happen or the project doesn't move forward and you will get a stop work order if you try and move past it because I'll call the inspector myself" ... the investor would not have been happy. He would have kicked and screamed and shouted that life was unfair and that construction is too expensive and that reality is a harsh mistress. Then, he would have paid up and you all would have moved on with your life.

You need to remember this: The law is on your side. Do not be afraid to weaponize it against an investor who wants you to do illegal work, or who is trying to get you to pay their profits.

I ASSURE you - if the shoe was on the other foot, the investor would not hesitate to throw you under the bus in the worst possible way. House burns down due to bad wiring that the investor insisted on? ... "sue the contractor, I had no idea and am not a licensed professional."

Consider this a learning experience and do the following - 

1) Get licensed if you aren't already. Pull a permit on every job, no matter how small.
2) Clean up your contract and write work scopes so tight they squeak.
3) Repeat the following on EVERY job... "This is not my house. My obligation is to give this person that which is legal and that which they pay for. If they want to not pay or want me to perform that which is not legal, I will use the law as my shield and either force them to behave well, or I will leave the transaction cleanly and let the liability rest with the next person."
4) Every relationship between investor and contractor is one of contrary goals. Every dollar spent by the investor is a dollar earned by the contractor, and a potential dollar of profit lost.
5) The average investor will GLADLY and HAPPILY work you into bankruptcy and lose zero minutes of sleep over it if that means they see another thousand dollars of profit.

I couldnt have said it better than the above post by Andy McGinnis

@Ashton Astillero    Never cut corners. Ever!  No matter what.  And never work for that guy again. Ever!  No matter what. 

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