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After repairing the rotten wood and other materials, we tiled the tub surround as well as the shower. In order to save the homeowner money, we did not tile the floor which was still good excepting right at the shower. You can see that the new tile and the old floor blend very well, particularly since the tub is white.
We increased the size of the shower to cover the area of the floor we had to remove to repair the wood damage, and we also pulled the right side of the shower forward to make it much larger, Note how we transitioned the floor at the shower to the threshhold. We used a smaller version of the listello used on the wall.
And voila! The shower turned out to be just beautiful. The homeowners picked out a tumbled stone floor which works perfectly with the wall ceramic.
The final product, including the new shower head and the glass. See Sterling Glass for some real nice work.