Small Project Design

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

The first step would be to look at the owner/contractor agreement. Did the contractor commit to a fixed price at the start?

Sincerely,


Jody Keppers, AIA, LEED AP, NCARB
Licensed Architect in Minnesota & Wisconsin

Mailing Address:
Keppers Design Architecture
620 Ridgewood Road
Duluth, MN 55804

Downtown Office:
301 West Superior Street
Duluth, MN 55810

218-409-6409
jkeppers@keppersdesign.com
www.keppersdesign.com


Original Message:
Sent: 12/4/2021 5:39:00 PM
From: Thomas D. Ahleman AIA
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Original Message:
Sent: 12/6/2021 5:43:00 PM
From: Jody S. Keppers AIA
Subject: RE: Closed cell shortage, GC obligation?

The first step would be to look at the owner/contractor agreement. Did the contractor commit to a fixed price at the start?

Sincerely,


Jody Keppers, AIA, LEED AP, NCARB
Licensed Architect in Minnesota & Wisconsin

Mailing Address:
Keppers Design Architecture
620 Ridgewood Road
Duluth, MN 55804

Downtown Office:
301 West Superior Street
Duluth, MN 55810

218-409-6409
jkeppers@keppersdesign.com
www.keppersdesign.com


Original Message:
Sent: 12/4/2021 5:39:00 PM
From: Thomas D. Ahleman AIA
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Original Message:
Sent: 12/6/2021 5:43:00 PM
From: Jody S. Keppers AIA
Subject: RE: Closed cell shortage, GC obligation?

The first step would be to look at the owner/contractor agreement. Did the contractor commit to a fixed price at the start?

Sincerely,


Jody Keppers, AIA, LEED AP, NCARB
Licensed Architect in Minnesota & Wisconsin

Mailing Address:
Keppers Design Architecture
620 Ridgewood Road
Duluth, MN 55804

Downtown Office:
301 West Superior Street
Duluth, MN 55810

218-409-6409
jkeppers@keppersdesign.com
www.keppersdesign.com


Original Message:
Sent: 12/4/2021 5:39:00 PM
From: Thomas D. Ahleman AIA
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Original Message:
Sent: 12/8/2021 3:22:00 AM
From: Joel O. Niemi AIA
Subject: RE: Closed cell shortage, GC obligation?

Things to consider:

#1, The Contract: is it a stipulated price?  If yes, the Contractor is bound to deliver for that price.  But see #3 and #5, below.

#2, Try to avoid demanding to go into the weeds of what the subcontractor's original proposal quote was.  Going there sets you up for interfering with the GC's privileged information, means and methods of getting things done, and will create hard feelings.  IF the GC volunteers to share the information, certainly look at it - don't pass up that opportunity.

#3,  If indeed "everyone" is having this happen, due to unforeseeable market conditions, this could be a "force majeure" situation where the specialist and the GC were helpless to prevent the price increase.  It will take a lot of legal costs on all sides to get to that point, and a lot of work won't happen on the job.

#4,  Consider figuring out a half-way point on the pricing.  Materials cost more, yes, but no upcharge for labor.  Maybe just spray-foam the really critical and hard to seal places, and use other products elsewhere.  Document what you decide to do, and get everyone to sign off.

#5,  What's the worst that could happen?  GC decides to unilaterally terminate the contract, walks off the job.  Now you have to find someone else to inspect and figure out what needs to be done, work it into their schedule .... and deal with a structure that might not have been weather-sealed for the winter.  Even if you / Owner goes after the GC's bond, don't expect much help there ($12,000 maximum out here in Washington).

--

best regards,
Joel Niemi - Architect
425.422.4276
jniemiarchitect@gmail.com
http://www.linkedin.com/in/jniemiarchitect

Original Message:
Sent: 12/6/2021 5:43:00 PM
From: Jody S. Keppers AIA
Subject: RE: Closed cell shortage, GC obligation?

The first step would be to look at the owner/contractor agreement. Did the contractor commit to a fixed price at the start?

Sincerely,


Jody Keppers, AIA, LEED AP, NCARB
Licensed Architect in Minnesota & Wisconsin

Mailing Address:
Keppers Design Architecture
620 Ridgewood Road
Duluth, MN 55804

Downtown Office:
301 West Superior Street
Duluth, MN 55810

218-409-6409
jkeppers@keppersdesign.com
www.keppersdesign.com


Original Message:
Sent: 12/4/2021 5:39:00 PM
From: Thomas D. Ahleman AIA
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Original Message:
Sent: 12/9/2021 7:08:00 PM
From: E Michael Shackley AIA
Subject: RE: Closed cell shortage, GC obligation?

There is also a legal term called betterment. Even when mistakes are made, an owner still has to pay the cost of items received.

Sent via the Samsung Galaxy S9, an AT&T 5G Evolution capable smartphone

Original Message:
Sent: 12/8/2021 3:22:00 AM
From: Joel O. Niemi AIA
Subject: RE: Closed cell shortage, GC obligation?

Things to consider:

#1, The Contract: is it a stipulated price?  If yes, the Contractor is bound to deliver for that price.  But see #3 and #5, below.

#2, Try to avoid demanding to go into the weeds of what the subcontractor's original proposal quote was.  Going there sets you up for interfering with the GC's privileged information, means and methods of getting things done, and will create hard feelings.  IF the GC volunteers to share the information, certainly look at it - don't pass up that opportunity.

#3,  If indeed "everyone" is having this happen, due to unforeseeable market conditions, this could be a "force majeure" situation where the specialist and the GC were helpless to prevent the price increase.  It will take a lot of legal costs on all sides to get to that point, and a lot of work won't happen on the job.

#4,  Consider figuring out a half-way point on the pricing.  Materials cost more, yes, but no upcharge for labor.  Maybe just spray-foam the really critical and hard to seal places, and use other products elsewhere.  Document what you decide to do, and get everyone to sign off.

#5,  What's the worst that could happen?  GC decides to unilaterally terminate the contract, walks off the job.  Now you have to find someone else to inspect and figure out what needs to be done, work it into their schedule .... and deal with a structure that might not have been weather-sealed for the winter.  Even if you / Owner goes after the GC's bond, don't expect much help there ($12,000 maximum out here in Washington).

--

best regards,
Joel Niemi - Architect
425.422.4276
jniemiarchitect@gmail.com
http://www.linkedin.com/in/jniemiarchitect

Original Message:
Sent: 12/6/2021 5:43:00 PM
From: Jody S. Keppers AIA
Subject: RE: Closed cell shortage, GC obligation?

The first step would be to look at the owner/contractor agreement. Did the contractor commit to a fixed price at the start?

Sincerely,


Jody Keppers, AIA, LEED AP, NCARB
Licensed Architect in Minnesota & Wisconsin

Mailing Address:
Keppers Design Architecture
620 Ridgewood Road
Duluth, MN 55804

Downtown Office:
301 West Superior Street
Duluth, MN 55810

218-409-6409
jkeppers@keppersdesign.com
www.keppersdesign.com


Original Message:
Sent: 12/4/2021 5:39:00 PM
From: Thomas D. Ahleman AIA
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Original Message:
Sent: 12/4/2021 5:39:00 PM
From: Thomas D. Ahleman AIA
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Original Message:
Sent: 12/4/2021 5:39:00 PM
From: Thomas D. Ahleman AIA
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Thomas,
I think it comes down to the contract between the CG and client. It depends how that is worded if additional costs are warranted or not. If the owner and GC locked in a price and the owner has performed within the contract then it's on the GC and their sub to cover the additional cost. If the owner has caused delays and the GC has notified them that the delays would increase the cost then that's a different story. The drastic increase in costs and material availability is causing havoc for architects.

------------------------------
Steven Kordalski AIA
Kordalski Architects, Inc.
Cleveland OH
------------------------------

Original Message:
Sent: 12-04-2021 05:38 PM
From: Thomas Ahleman
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

A lot of contractors have been caught with the escalating cost of materials. From what we hear there is a major supply chain issue with insulation. Commercial walk in refrigerators for restaurants are being canceled, back order or doubled in cost even with signed purchase order. The restaurant equipment manufacturers can’t find insulation and workers. You can’t provide what is not on the market.

You need to have a meeting between the contractor and the owner. Let him make the case and explain the options. If the Owner wants to cut a deal, all’s well. If the Owner wants to fight for a fixed price, he may end up paying in other ways. I think this is one of those ethics questions.


Original Message:
Sent: 12/6/2021 6:10:00 PM
From: Steven A. Kordalski AIA
Subject: RE: Closed cell shortage, GC obligation?

Thomas,
I think it comes down to the contract between the CG and client. It depends how that is worded if additional costs are warranted or not. If the owner and GC locked in a price and the owner has performed within the contract then it's on the GC and their sub to cover the additional cost. If the owner has caused delays and the GC has notified them that the delays would increase the cost then that's a different story. The drastic increase in costs and material availability is causing havoc for architects.

------------------------------
Steven Kordalski AIA
Kordalski Architects, Inc.
Cleveland OH
------------------------------

Original Message:
Sent: 12-04-2021 05:38 PM
From: Thomas Ahleman
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

The fundamental question is: what is in the contract? That should illuminate the issue. Cost plus, stipulated sum, negotiated bid? Each have a different determination of GC obligations. I suggest  GC and owner include the reality of price increases over time, including possible savings (wishful thinking), in future project contracts.

------------------------------
Peter Foxley
Principal
foxleyarchitecture
Pearland TX
------------------------------

Original Message:
Sent: 12-04-2021 05:38 PM
From: Thomas Ahleman
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------

Original Message:
Sent: 12/7/2021 9:58:00 AM
From: Peter J. Foxley
Subject: RE: Closed cell shortage, GC obligation?

The fundamental question is: what is in the contract? That should illuminate the issue. Cost plus, stipulated sum, negotiated bid? Each have a different determination of GC obligations. I suggest  GC and owner include the reality of price increases over time, including possible savings (wishful thinking), in future project contracts.

------------------------------
Peter Foxley
Principal
foxleyarchitecture
Pearland TX
------------------------------

Original Message:
Sent: 12-04-2021 05:38 PM
From: Thomas Ahleman
Subject: Closed cell shortage, GC obligation?

We designed a small residential addition and three days before the insulation was to be installed the contractor informed me that there is a shortage of closed cell nationally. He said the insulation price has doubled and that the owner had to eat that or accept an alternate insulation for the walls which would also meet code....but still see an overall price increase.
I checked with insulators I've workded with and they confirmed a shortage and price increases. My question is, how much of the price increase should the owner bear? If I were the owner, I would not want to pay more than what is in the contract.  The job has had delays, most of which are of the contractor's doing. If the GC had let the insluation contract when he signed the agreement with the owner, this would not be an issue. And it would be less of an issue (ie less signfinicant price increase) if there had not been delays. I could understand some price increase but it is clear to me that the GC as not been in touch with his insulator until the last minute. I want to be fair to the GC and, of course, to my client. Thoughts?

------------------------------
Thomas Ahleman AIA
Principal
Studio Talo Architecture, Inc.
Evanston IL
------------------------------