CONSTRUCTION CONTRACTS

Building - Contracting - Construction Management:

We offer a variety of services which can be packaged or individually selected.

The more common Building Agreements tend to follow one of the following methods.

1. All Inclusive Building Contract

How it works
Everything mentioned on the plans and/or specifications is included unless specifically stated as not included. Typically, all included items and products are more exactly specified down to the model number and color.

Pros & Cons

	The contractor assumes all of the cost risk.
	The contractor selects all subcontractors.
	The buyer knows exactly what the entire project will cost.
	Changes are difficult to make and usually result in a higher cost to the buyer.
	This is not a good choice of agreement for a custom structure as it tends to lack flexibility.

2. All Inclusive Building Contract with specific allowances

How it works
Everything mentioned on the plans and/or specifications is included unless specifically stated as not included. Typically many categories relating to trim, fixtures, cabinets, flooring, appliances, etc. are classified as allowance items and assigned a value as requested by the buyer. These allowances are under the complete control of the buyer. The contractor has no claim to any of the allowances, and makes no guarantee as to their sufficiency.

Pros & Cons

	The buyer can request any line item be scheduled as an allowance item.
	The contractor selects all non-allowance subcontractors.
	The contractor assumes the cost risk of all non-allowance items.
	The allowance money, item by item, belongs to the buyer, who may spend some, all, none or more on an item by item basis and assumes all the cost risk for the allowance items.
	The buyer contracts for the allowance items and pays for they directly.
	The contractor has no claims to any of the allowance monies.
	Changes are easily made to any allowance items.
	This is a very good choice of agreement for a custom structure as it is inherently flexible.

Most popular method - (All Inclusive Building Contract with specific allowances)

3. Actual Cost plus a fee

How it works
The contractor receives a straight fee. All costs of construction are paid directly by the buyer at strict invoice cost. The contractor is responsible for directing the work as if he were paying the bills directly and in many cases has the right to choose the more important subcontractors, or at the very least give the owner a choice of three acceptable subcontractors for each construction task.

Pros & Cons

	The buyer selects all subcontractors from a list acceptable to the contractor.
	The buyer assumes all the cost risk.
	The contractor assumes none of the cost risk.
	The buyer pays all costs directly and any NET savings belongs to the buyer.
	Changes are easily made to any allowance items.
	This is extremely flexible and allows the buyer to change the project significantly.
	This allows the buyer a much greater hands on position.
	This requires measurably more effort from the buyer.

4. Actual Cost plus a fee with a not to exceed guarantee

How it works
The project cost is estimated based on everything mentioned on the plans and/or specifications. Typically several categories are given an allowance value. This estimate is typically guaranteed NOT TO EXCEED by more than 3% the total estimated cost of all non-allowance items in total. The contractor receives a straight fee which is reflected in the cost breakdown. This fee would be reduced by any amount in excess of a 3% overrun of all non-allowance items in total. The owner typically pays all costs directly. The contractor is responsible for directing the work as if he were paying the bills directly and has the right to choose the non-allowance item subcontractors.

Pros & Cons

	The contractor typically selects the non-allowance subcontractors.
	The contractor assumes limited cost risk on non-allowance items.
	The buyer assumes limited cost risk on non-allowance items.
	The buyer selects all allowance subcontractors.
	The buyer assumes cost risk on non-allowance items.
	The buyer pays all costs directly and any savings belongs to the buyer.
	Changes are easily made to any items.
	This is extremely flexible and allows the buyer to change the project significantly.
	This allows the buyer a much greater hands on position.
	This requires measurably more effort for the buyer

5. Fee for specific services
There are many services we can perform directly for you on a limited basis. These services can be negotiated on and item by item or hourly basis.

	Structural Inspections
	Work progress inspections
	Design work
	Pre-build Consulting
	In-process Consulting
	Jobsite layouts
	Subcontractor negotiations
	Partial phase contracting, examples are (Permit through Drywall) or (Shell Building)

Most popular method (All Inclusive Building Contract with specific allowances)

We are willing to work under any of these methods, or a hybrid form preferred by you.

The only method to avoid is one that puts you and your builder on opposite sides, specifically cost plus a percentage. This type of agreement requires you to spend more for the builder to profit!