Many home remodelers spend much of their time estimating and writing proposals. There are two main types of contract agreement models, fixed price and cost plus. Many homeowners prefer the fixed price model which helps avoid the risk of having the price on the home remodeling project continue to rise as the project progresses.
The many benefits of having a fixed price contract include:
SHEETROCK PRICES
Avoid the risks of an open-ended agreement - When homeowners enter into an open ended agreement with a contractor there is no telling what the end cost of the project might be. A fixed price contract with a good scope of work and defined set of allowances helps to insure that everyone involved has a good understanding of the costs. Home remodeling costs stay within predetermined allowances - When a client enters into a fixed contract, provided they stay within the allowances given, they know ahead of time what they will have spent when the contract is completed. A set price contract requires the contractor to understand his costs and be good at controlling them. The contractor can focus on the results of the home remodel - Set price contracts, also called performance reimbursement contracts, are designed to be more focused on the results and project objectives than on the methods of performance. Fixed price contracts should define the appropriate degree of performance flexibility. Homeowner faces less risk - Since a fixed price contract requires the homeowner to pay the contractor a specific and previously agreed price, the homeowner faces fewer risks, including market-price risks. Better project planning and certainty - Unlike the cost plus model, fixed price contracts generally result in definite and predictable project outcomes and timelines. They also lead to better means of price, timing controls, and central planning. As a result, the fixed price model is widely used in government procurement because it provides more certainty regarding the final project cost.
In conclusion:
A non negotiable contract requires a contractor to understand his costs and be good at controlling them. While there are a few specific times where a cost plus model might be appropriate, such as when a certain aspect of a job cannot be quantified ahead of time, generally cost plus agreements create a strained relationship between the homeowners and their contractor. Typically with cost plus contracts there is much time spent justifying receipts and hours spent. With a fixed price agreement the contractor delivers the product for the amount agreed upon and both parties are happy.
5 Benefits of Having a Fixed Price Contract in Place For Your Next Home Remodeling Project
Kevin Buckley founded Kevin Buckley Builders, Inc. in 2005. Kevin Buckley Builders draws on their founder's many years of "hands on" real estate consulting with buyers and sellers along with his construction experience. Kevin Buckley Builders offers the best renovating services available in metro-Atlanta and its surrounding suburbs. Their services include, Atlanta home remodeling, new home construction, home additions, and home renovations.
For more information visit: www.KevinBuckleyBuilders.com
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