Cost Plus vs. Fixed Cost Building, Which One is Right For You?

Cost plus and fixed cost building contracts are two different ways of pricing construction projects.

Cost plus contracts involve the owner paying the actual costs of construction plus a fee for the contractor's services. This fee is typically a percentage of the total cost of the project. This type of contract is often used when the scope of the project is not fully defined or when there are a lot of unknown factors that could affect the final cost. Cost plus contracts provide more transparency for the owner as they can see exactly where their money is going, but they also carry the risk of the project costing more than originally anticipated.

On the other hand, fixed cost building contracts involve the contractor providing a fixed price for the entire project. This price is usually based on a detailed estimate of the costs involved in the project, including materials, labor, and overhead. Fixed cost contracts provide more certainty for the owner as they know exactly how much the project will cost, but they also carry the risk of the contractor cutting corners to stay within the fixed budget.

Ultimately, the choice between cost plus and fixed cost building contracts will depend on the specific circumstances of the project and the preferences of the owner and contractor.