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Community and Q&A

“Rough Payment” Demand

Stolzberg | Posted in General Questions on

Our HVAC sub has been ghosting us for months and when I finally sent an email asking them to immediately give me a plan for completing the project, the response was “we have been waiting for rough payment (we are way beyond rough at this point)”.  We hired them to install ducted minisplit and ERVs: one air handler in basement with ducts to first floor, one ERV in basement with independent ducts to first floor, one air handler in conditioned attic with ducts to second floor, one ERV in attic with independent ducts to second floor and attic. So far they have installed the air handler and ERV in the attic and run ducts to ceiling registers, though not exactly to our specifications.  In the basement they have run the duct trunk, but no connections to registers (haven’t even cut them into floor yet) and have not installed the ERV or its ducting.  Our contract says second payment is due “upon completion of rough” but based on work completed to date I did not consider the rough complete.  What is considered reasonable amount of work to be considered complete rough?  Should we just pay the second installment to get them to show up and finish this project or should I expect more work before paying them any more?

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Replies

  1. Keith Gustafson | | #1

    You said they ghosted you, but have they sent you a bill?

    I am the last one to give a contractor a pass, but it sounds like they have done a fair bit of work and it would probably be wise to pay them so they will finish your job

  2. Expert Member
    Malcolm Taylor | | #2

    Stolzberg,

    Rough-in of mechanical systems or HVAC is the duct-work and any other lines that need to be installed before wall finishes or insulation goes in. At that stage no equipment or appliances would be in place unless they would be inaccessible later.
    It is very similar in scope to electrical rough-in. From your description you are well beyond rough-in. It's too bad they didn't spell out what each draw consisted of to avoid this type of confusion for their clients.

  3. Expert Member
    DCContrarian | | #3

    Is this work being inspected? Here all rough work needs to pass inspection before you can close in. I wouldn't pay for rough work unless it had passed inspection.

  4. Expert Member
    Zephyr7 | | #4

    I agree with Malcolm: the contractor should have specified milestone payments if they wanted partial payments as the project progressed. I do that on commercial jobs all the time for larger projects, I specific the total for the project, plus the milestones and when each milestone is due. Milestomes are something like "20% deposit on project signing, 30% milestone payment at delivery of equipment, 40% milestone payment at project completion, 10% milestone payment at customer acceptance". I'll put in more detail about what constitutes completeion of each milestone, but that's a general idea of how it works.

    Rough installation would be ductwork and major equipment, what would be subject to a rough inspection before the walls go up and this stuff gets hidden from view. This is pretty while defined in the construction world.

    Bill

  5. Stolzberg | | #5

    Thanks for the feedback. Our contract has 4 payments: about 1/3 deposit, about 1/3 "upon completion of rough", a 3rd payment upon installation of air handlers and outdoor units, and final payment upon completion. Since most of the ducting has not been run in the basement yet and the ducting in the attic isn't exactly where I wanted it in order to build knee walls, I had not considered rough completed. However, they are claiming we are beyond rough and want 2nd payment before they will continue.

    1. Expert Member
      DCContrarian | | #6

      Is the basement finished? Usually rough only includes what is covered by drywall, if the basement isn't finished the ducting wouldn't be part of the rough, that would be done as part of the installation of the air handlers.

      The attic not being exactly where you want it is a stickier issue. Was the location specified? If it wasn't then the cost of moving it is on you. If it was and they didn't follow the plans then it's on them. Where that can get sticky is if the plans have language giving the installer latitude.

    2. C L | | #7

      Except in this case, you described that some equipment is installed, so that is technically part of the 3rd payment, and they said they are waiting for the 2nd payment.

      This sounds like misunderstandings and incorrect assumptions about the other party all around.

      Go meet with them for a listening session whose agenda is a) what they are due prior to remobilizing and how/when they will receive that; b) when they will remobilize and what/when they will accomplish prior to 3rd payment c) what their lead time is to schedule their workers; d) how the miscommunication about duct location happened and what if anything can/will be done to resolve it (both cost and time) and e) how to avoid miscommunication going forward so you can complete this on the same page.

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