Remodeler Kevin Wallace learned an expensive lesson on a project in Pacific Heights. The homeowners wanted to turn a low-ceilinged basement into livable space. Wallace estimates the ceiling was 7 feet high, but HVAC and plumbing pipes took up a lot of the overhead space. "You could not walk without hitting your head on beams, pipes, or ducts," he says.
Wallace knew he would have to lower the floor to finish the basement. Like most houses in San Francisco, this large 1900s house was built on sandy soil. When his crew excavated through the original floor, the 55-foot foundation wall cracked.
His crew jacked up the wall to resupport it and approached the owners with a $55,000 change order to replace the wall. The homeowners thought Wallace should pay for the wall because it was damaged during construction. They hired an independent engineer who suggested the two parties split the cost, mainly so that they could maintain a cordial relationship.
"We finished the job and did OK on gross profit, and we did not have a fight or a lawsuit," Wallace says. However, the gross margin was lower than they had expected and Wallace still had to pay an extra $14,000 to fix and repaint the cracked walls. (His insurance company reimbursed him for the cost of the paint.)
Wallace's crew completed the 1,400-square-foot room, but for future projects, the company added a line item about soil conditions to its "Not in Contract" list.
"We have 15 items on our NIC list," Wallace says. Most are items like this one -- things that went wrong on past jobs.