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, you will. But you don’t have to anymore. Naples Custom Home Cost Consulting (NCHCC) is that “check”. We offer expert Owner’s Representative Construction Services to Clients anywhere in FL…and beyond.

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 using CPF contracts. CPFs are used because there are many unknowns that preclude Builders from determining a total, hard cost for the work, so they can’t offer a Fixed-Price. With a CPF, 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:

CPFs not only empower Builders to provide pricing that’s incomplete (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 to 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, the more expensive the job, the higher the percentage of money Owners will unnecessarily overpay gets!

So, how can you know how legitimate any Estimate you’re considering at this point is? The answer =you can’t. And 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, like 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 that have, or are considering, a project. As Cost drives the entire process (see Video), we’ve

developed – and now offer – a complete slate of Cost Management-specific services (see inset pic) that few 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 CPF with a Builder? 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 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!

You wouldn’t buy something without knowing how much it cost – right? That is why most things, including typical new homes, are sold for an exact, “Fixed-Price” (FP). With FP homes, the Builder has determined – and has a strong incentive to control – what are their costs.

But Custom Homes and Remodeling Projects are different. Builders can’t know, exactly, what resources will be needed for them, so they can’t offer an Owner a FP. Instead, they will propose to do the work on a “Cost-Plus-Fee” (CPF) basis. With a CPF Contract, the Builder provides the Owner with an Estimate of the job costs and agrees to accept a lower Profit percentage than usual. In exchange, the Owner agrees to pay for all of the Project’s costs – no matter what they end up being or how they come to pass.

CPF deals work in a typical construction market. But Florida is not a typical market. It is “inverted”: there is more work than there are resources available to do it. Unprecedented Material cost increases, Labor shortages – and that was before Hurricane Ian. All of the market forces that drive competitive pricing and high quality are weakened, pushing construction costs up. This means that Project cost control is challenging on every local construction Project, whether the job is a FP or a CPF.

But with a CPF deal, now the Owner (you), not the Builder, are exposed to all of the delays and cost risk in a market that exploits those exact vulnerabilities. That’s the “injury”. The insult? You’ve left a fox to guard the henhouse: a Builder who isn’t obligated to control your costs and who actually makes MORE money the higher the costs are!

Builders must compete for said resources. The Fox doesn’t raid the henhouse with ill-intent for the Farmer, he does it because chasing down hens otherwise is difficult. In fairness, most Builders, likewise, aren’t actively trying to take advantage of Owners. Compromising an Owner’s time and money is simply the easiest way for them to navigate the “inverted” market and compensate for their own poor Project Management. How will you know how much of your time and money is being compromised?

Owners like their Builders. They rely on them to act in “good faith” to manage costs, but assurance is not insurance. All Foxes Builders must, ultimately, put their best interests ahead of yours. So, who’s really in your corner?

Owner’s Representatives are. They work with the Team, but solely for you, ensuring that your needs for the Project (cost, schedule, quality) are met. With 25 years of first-hand, local experience, Naples Custom Home Cost Consulting offers a full range of Construction Project Management Services to assist Clients, including Owner’s Rep Services that no one else ever has or can. We take every opportunity to create equity by adding value to your home and know how to keep Builders in check without undermining them.

With CPFs, YOU ARE buying something without knowing how much it will cost. Are you really on Budget? Schedule? Is your Project being managed as well as it could be? Hint: it’s not. It’s everything you won’t/can’t know about your Construction Project that, now more than ever, will cause you to incur considerable, but UNNECESSARY, costs.

So, DON’T. Protect your investment. Enjoy peace-of-mind. Let Naples Custom Home Cost Consulting do the “knowing” for you.