Much like the Fixed Price Contractor, butThe “design build” contractor prefers to get a commitment BEFORE design or pricing have been presented.
Generally involved with the design; usually requesting a non-refundable deposit prior to design commencement.
Many customers who comprehend that design services are valuable when provided in tandem with solid construction will pay for such a service. The problem is that even if the design is not to the liking of the customer and although the construction may never take place, there is a still a cost associated to this service and it can cause added COST, PRESSURE and DISAPOINTMENT to the customer.
A cost-plus contractor compiles a budget, with a breakdown of line items as per specifications and drawings provided. A common misconception is that the word “cost” in cost-plus is the builder’s ACTUAL COST, but it is usually not.
Typically the “COST” has a % of profit for the business’ overhead.
Mark ups can be manipulated in several ways, depending on the contractor. Some contractors may reduce their management fee to appear a better value than a competitor.
At the end of the day, if you’re not paying the trades/supplier direct, then you’re not getting the dealer price.
Generally they do not operate with transparency May have some in house trades and sub‐contracts independent trades. Margins typically 35 to 40% Change orders and extras often 40 to 70% margins.
Contractor receives payments and pays sub-trades and suppliers.
Increased exposure to Builder Liens for unpaid sub-trades or suppliers.
Sometimes called construction management; the contractor compiles a budget with a full breakdown of line item costs based on drawings and specifications provided by independent designer or homeowner.
You have the opportunity to compare quotes against the budget and you approve the quotes prior to your commitment of each.
Obtain quotes from long term independent trades. Operates with the transparency of BUILDERS ACTUAL PRICE COST plus a flat management fee. Margins typically 25 to 30% Change orders and extras with no premiums Payment terms are scheduled pay periods based on actual costs in place and work completed. No advance payments except to suppliers for custom ordered products.
All payments except management fee paid directly to trades and suppliers at quoted builder pricing. Management fee only, paid directly to contractor.
By paying trades and suppliers directly you eliminate the possibility of Builder Liens.