When and Why to use a Demolition and Discovery Agreement

In today’s market, determining if multiple construction project bids are truly apples to apples can be a daunting task.
There are contractors out there who will utilize every possible shortcut in order to come in as low bidder and you would never know it by examining their written estimates.
Often in remodel construction there are unknowns when determining what may or may not be hidden behind walls, buried in attics, or underneath slabs or landscape needing to be excavated and some contractors feel they are left with no choice but to bid the job as “worst case scenario” to avoid taking a loss. In effect, the contractor who is the highest bidder may be omitted from the selection even though he or she is the most qualified.
There is one alternative that can be advantageous to both the parties which is worthy of some serious consideration.

Here’s how a Demolition and Discovery Agreement works-
In order for the contractor to bring in his project bottom line at the lowest possible cost,
both parties can opt for an agreement to do enough minor demolition to reveal hidden conditions and to more precisely determine the actual scope of work needed to complete the project.
All work needed to assess these conditions would be done through a separate contract for an amount both parties agree to beforehand. As a condition of this agreement, the homeowner should not be obligated to award the job to the contractor performing the observation. This gives them the advantage of providing this information to other bidders in hopes of keeping the cost down. The contractor providing the assessment may opt to reimburse the expense to the homeowner if they are awarded the job. If the discovery determines that the job will be cost prohibitive, the contractor should be paid to repair all damages incurred from the demolition.
This also allows the contractor performing the work to be compensated for their services even if the job is awarded to someone else while at the same time providing the homeowner with some very useful information.

One thought on “When and Why to use a Demolition and Discovery Agreement”

  1. There is a fine line between whether it is more cost effective to renovate or demolish a building. You make a great point about how it can be nearly impossible to tell the structural conditions of a building without some invasive investigation. I’ve heard that if support structures are compromised or need to be replaced, it is often more cost effective to hire a demolition team and start over. No one wants to live or work in a building that could potentially collapse.

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