Now Reading
Getting the Most Out of Custom Home Building

Getting the Most Out of Custom Home Building


Cost Plus Contracts may be good for an owner that wants to be more involved in the building process. The owner pays ALL Costs (and overages) plus the Builder’s fee (a percentage or a set price). The builder should provide expense reports if he or she is managing the money. Keep in mind the builder is not incentivized to save you money. Vendors may not give you the best deal or may offer rebates of some type to the builder. The builder doesn’t have the worry about cost, however it allows the owner the flexibility he/she would otherwise may not be entitled. Be prepared to have the time to take on a project management role which includes making decisions, choices and most importantly reviewing the expense reports. A Cost Plus Contract may be the right choice if you demand the finer things in life.

Fixed Price Contract is best used when there is a completely defined and detailed scope of work to be performed. The builder is responsible to provide an end result for a Fixed Price which allows the owner the freedom from any management. Oversight by the owner is recommended but not required.  Any cost overages should be the responsibility of the builder. Review plans, specifications, and selections carefully. Make sure everything you want and need is included. A Fixed Price Contract is the only choice to stay on budget.

If you have the time to be hands-on and you are willing accept the challenges that come with construction, then you may want to consider a Cost Plus Contract. If your goal is to get to an end result and staying on budget, invest time during the negotiation phase of a Fixed Price Contract making sure everything is included in the scope of work.

View Comments (0)

Leave a Reply

Your email address will not be published.

Scroll To Top