Fixed bid: This
is a contract with a bottom line that is more
or less "immovable".
Apart from changes made by you, the Home Owner,
by Regional Building, or by circumstances which
are unforeseeable (as detailed in the contract)
this is the price you'll pay. The upside for the
Homeowner is that there's much less room for surprises.
The down side is that more risk falls on the contractor
and as a result the numbers are slightly padded
for the unexpected.
Fixed Fee/Cost Plus: A
traditional cost plus bid takes all the expenses
of the job and in the end adds on an agreed upon
percentage to the total bill as the general contracting
fee. This works out great for the contractor
as all risk on his end are removed and because
a higher overall cost only helps his bottom line
in the end. Because of this unfair advantage
to the builder, we typically prefer for a rendition
of this that seems to benefit both parties. Using
the cost plus model, a fixed fee is established
based on the sum of the estimated overall construction
costs. Actual costs of subcontractors, material
vendors, Building Department fees, etc. are passed
on with out "mark-up" and the fixed fee is unchanged
unless major change orders are added to the scope
of work.
