Key Takeaways:
- Cost Plus Fee contracts leave property owners in the dark regarding project costs.
- Owner rep services protect property owners from the risks associated with cost-plus fee construction contract agreements.
- Cost-plus fee agreements are common for custom home remodeling and construction projects.
- Builders have little or no accountability concerning estimates when using cost-plus-fee contracts.
- NCHCC offers cost management-specific services to help property owners avoid cost pitfalls and empower them to make well-informed decisions.
Well, that’s exactly what you’re doing when you sign a “Cost-Plus-Fee” (CPF) or “Cost-Plus” Contract for your custom Construction Project! Left unchecked, you will overpay for the work. Not you “might” overpay with cost-plus-fee contracts, you will. But you don’t have to. Naples Custom Home Cost Consulting offers expert Owner’s Representative Construction Services to Clients anywhere in FL, including unparalleled project management.
So, you’re considering a proposal from a Builder for a project. How do you know the pricing is accurate? Maybe you have multiple proposals that vary considerably. Why is that? How do you go about comparing them?
Most custom construction projects are built this way. CPFs are used because many unknowns preclude builders from determining a total, hard cost for the work, so they can’t offer a Fixed-Price. With a cost-plus-fee contract, the Builder agrees to construct the project for a certain, lower Fee (usually a percentage of the actual total costs) than what they would typically charge. In exchange for this concession, the Owner agrees to take on the cost-risk that the Builder normally would.
The Owner, then, is responsible for all of the Project’s costs – no matter what they end up being or how they come to pass.
Each Builder has the same motive – to be awarded the Contract. They presume that price will be the Owner’s deciding factor. Because of unknowns on custom jobs, each Builder is afforded considerable leeway when compiling their numbers. Therein lies the Owner’s problem:
Cost-plus-fee contracts not only empower Builders to provide incomplete pricing (too low), they actually incentivize them to! Why risk losing your job by providing you a complete, accurate Cost Estimate that will be higher than what you’ll get from competitors? Since the cost-risk lies with the Owner, Builders can’t be held accountable for their Estimates. Further, with CPFs, Builders usually have little to no formal obligation to control the Owner’s costs. And why would they try when, in fact, they make more money the higher the costs are! Indeed, with cost-plus-fee construction contracts, the more expensive the job, the more money Owners will unnecessarily overpay!
So, how can you know the legitimacy of any estimate you’re considering at this point?
The answer =you can’t. That is why, when you contract for a custom construction project, you are buying something without knowing how much it costs!
This is when you need to bring in a home building consultant: NCHCC!
How does NCHCC control construction costs and save you money? We perform the diligence that Builders don’t (because they don’t have to). They are reactive, we are proactive. We apply unique insights acquired over 25+ years of firsthand construction experience in FL to provide diligent Owner’s Rep services to clients working on, or considering, a project. As cost drives the entire process, we’ve developed – and now offer – a complete slate of cost Management-specific services that no other home building consultants do. Our specialty? Reconciling the contracts and estimates that Builders propose so that you avoid cost pitfalls and are empowered to make well-informed decisions.
Already signed a Cost Plus Fee Construction Contract? Project already underway? We can be brought on to any Project, at any time, just about anywhere. It’s never too late to gain – and maintain – control of your Project’s costs.
Investor that has, or is considering, a Spec home or renovation of an existing property? At NCHCC, we make you money by saving you money! By adding value to the job, we increase the equity in it and, therefor, your ROI.
The goal is always the same: build the Project for the lowest cost, as quickly as possible, and without sacrificing quality. At NCHCC, we strive to strike the optimal balance between Cost, Duration, and Quality on every Project, without undermining Builders. Let us solve the equation on yours.
Know where you stand before you sign a Contract or take a stand if you already have. The sooner you call NCHCC, the better!
Naples Custom Home Cost Consulting
Complete Scope of Cost Management Specific Services to ensure you DON’T OVERPAY for your Project!
| Invitation-to-Bid + Written Specs | Contract + Budget Analysis |
| Monthly Statement Reviews | Real-Time Project Cost Audits |
| Final Cost Consulting | Final Cost Reconciliation |
NCHCC Saves Owners Money
| Typical Builder Project Cost | Net Savings with NCHCC Cost Management |
|---|---|
| $1,000,000 | $80,000 |
| $3,000,000 | $180,000 |
| $5,000,000 | $550,000 |
Know What You are Paying for with NCHCC
Custom home remodeling and new custom home construction projects involve many variables, moving parts, different parties, and a range of factors (e.g., scope, size, location, etc.). That makes it easy for property owners to get lost in the construction maze. NCHCC helps home and property owners throughout Florida successfully navigate their way through it.
Contact NCHCC to make sense of CPF contracts and take control of your new custom home or custom remodeling project. Yes, cost-plus-fee structured contract options will always have less certainty. That is by design and inherent to the process. That doesn’t mean, however, that they should also be a complete mystery.
Take the mystery out of the cost plus fee construction contract and add savings, more certainty, and the control owners deserve with NCHCC by your side.
