In the construction and home remodeling industry, there are two types of contacts commonly used. They are the "Fixed-Price Contract" and the "Cost-Plus-Fee Contract."
Fixed-price contracts are sometimes called "lump sum" contracts. They work well for most small to medium size projects where the scope of the work is well-defined. They also work well with Specialty Contractors who are doing single items, such as a window replacements or floor refinishing.
With a fixed-price contract, the contractor is aware of all the conditions and has control of the project during the construction category. In addition, the home owner has pre-selected the options so that there is no need to adjust the scope of the work being done. The contractor agrees to complete the job for a fixed fee, which is agreed upon ahead of time by the home owner and contractor. This gives you peace of mind as to the cost, and assures the contractor that he knows exactly what you want and how the job will be performed.
If your job is complex, unique, or large, a Cost-Plus-Fee arrangement may be a better option for you. This arrangement keeps the job running smooth and within its means. The contractor establishes his fee for doing the work, and this is tagged onto the cost of materials. In such a case, if the project grows in scope, it need not be stalled by renegotiating the price of the project. For example, if the homeowner decides at the last minute that he prefers upgraded bathroom fixtures, the modification can be easily done without stalling the project. This is because the exact cost of materials can stay fluid through the course of the project. Of course, an accurate budget for your job will keep it from growing beyond your means.
Changes happen with less disruption in a cost-plus-fee arrangement than in a fixed-price setting. The costs are monitored and will still have an effect on the budget. However, the homeowner is kept informed about the budget throughout the project so that decisions can be made with as little disruption to the project or budget.
We recommend to clients that we get involved early to help establish an estimate that can be converted to a budget when the project begins.
Home Sweet Home Improvements
7225 Wotton Road
Bealeton, VA 22712