Unlock Cost-Plus, a smarter business model
Fixed fees are a fantasy.
The only constant is change.
Regardless of your contract type, or how good your preconstruction process is, costs change over an 18 month home build.
Make sure your contracts and processes guarantee profit given this reality.
What is Cost Plus?
Cost-Plus is a contract model commonly used by organizations like the AIA and NAHB that separates a builder's fee from project costs.
Instead of locking in a fixed price, the client pays the actual cost of construction plus an agreed-upon fee—ensuring the builder remains profitable even when materials, labor, or scope change over time.
Costs
Labor, materials, and subcontractors
Builder's fee
Typically 10% – 25%
Total Cost of Construction
Use a budget or control estimate to manage and track costs
Controlling Cost with Cost Plus
"Cost plus makes it impossible to controls costs
Not true.
Every cost plus project needs to undergo a rigorous competitive bidding project just like any other project. This should establish a baseline budget that can be memorialized in the cost plus agreement.
During construction actual costs need to be compared to the baseline budget to keep everyone informed of the actual cost of construction. This allows for course correction as the project progresses.
What is required for Cost-Plus contracts?
Bill for every expense
Every cost must be captured and invoiced
Payments to date
$1,658,927.91
Expenses are 96% of payments
Control costs
Track spending against a target budget, even as totals change
Communicate change
Keep owners informed as projected costs update over time
Cost to complete
$920,812.30
Remaining cost to complete minus balance
Cost to complete
Always know how much funding is needed to finish the project
What is Buildplus?
Buildplus is a platform and repeatable process to deliver profitable projects using Cost-Plus.
(We do fixed fee too, but we really like Cost plus)