Rural New Home Build—School Me Up

[brymoore]

Wife and I just finished up selecting a builder for our new home we intend to build in a couple of years. Very eye-opening experience! For those on this thread that are either GC's or work for GC's @mtmuley , @Hem , @Gerald Martin , on custom homes, do any of you still do fixed price contracts or all they all cost plus? We are building in an area with few, if any, spec builders almost all are building custom homes. Close enough to Jackson to have an influence but not at Jackson prices just yet. None of the builders we spoke with would do a FP contract anymore. Wondering how common this is?

It doesn’t surprise with the fluctuations in costs. I know the businesses I work with all went to cost plus when bidding contracts after getting burned.

 

[BackofBeyond]

Wife and I just finished up selecting a builder for our new home we intend to build in a couple of years. Very eye-opening experience! For those on this thread that are either GC's or work for GC's @mtmuley , @Hem , @Gerald Martin , on custom homes, do any of you still do fixed price contracts or all they all cost plus? We are building in an area with few, if any, spec builders almost all are building custom homes. Close enough to Jackson to have an influence but not at Jackson prices just yet. None of the builders we spoke with would do a FP contract anymore. Wondering how common this is?

Would you tie yourself to a contract and price now for work you’ll do and be paid for in a couple years?

 

[Deleted member 18333]

Would you tie yourself to a contract and price now for work you’ll do and be paid for in a couple years?

I understand why they do it, I had thoughts that some would still work under FP with the understanding that the Cost quoted today is based on todays prices and that they would produce a final quoted cost in the year that they intended to start. Not wholesale different that how I structure pricing on some of my contracts.

 

[woods89]

Would you tie yourself to a contract and price now for work you’ll do and be paid for in a couple years?

To add, this isn't only an issue on the material and fixture front, but labor as well. Those costs have risen notably in the last few years.

We still do fixed price, but it's in remodeling, so total costs are less, and typically no more than 6-12 months from initial contact to project completion. I've generally got enough room in those estimates to handle some movement. It's a little different story when you double or triple the time-frame and up the costs a lot.

 

[Deleted member 18333]

To add, this isn't only an issue on the material and fixture front, but labor as well. Those costs have risen notably in the last few years.

We still do fixed price, but it's in remodeling, so total costs are less, and typically no more than 6-12 months from initial contact to project completion. I've generally got enough room in those estimates to handle some movement. It's a little different story when you double or triple the time-frame and up the costs a lot.

When we finally whittled down our short list of Contractors, all produced a CP estimate based on todays costs with the understanding that a final estimate would be produced 2-3 months prior to breaking ground. A few builders balked at doing this therefore they did not make the short list. All cited labor as the biggest unknown in their estimates.

 

[Gerald Martin]

We are cost plus only. We set our GC fee at an agreed upon percentage of the budgeted cost at the time of signing the contract. Customer is responsible for any costs over budget due to pricing changes or if the scope is greater than anticipated at budgeting.

We do get reimbursed for the portion of over budget work that we do with company labor however we forgo any percentage for GC’ing the portions over budget.

This strategy seems to serve us well. We know we’re not going to get stuck for costs beyond our control and the customer knows that we don’t have an incentive to upsell beyond budget because we don’t make any more money by exceeding budget.

 

[brymoore]

Prices have jumped significantly. A job I’d normally pay someone to do was bid so expensive, I forgot my PTSD to do it myself.

It’s a crappy job!

 

[millerkiller77]

Would you tie yourself to a contract and price now for work you’ll do and be paid for in a couple years?

Lol, try getting a materials quote that's valid past 30 days

 

[jlong17]

I'm late to the thread @rtraverdavis but I wanted to say congrats! What a beautiful place. Don't post too many pics or you might reopen that dream of ours to uproot our little family, buy a piece of land, and build something.... maybe someday. Enjoy making memories with your family, super happy for you!!