Types of Contract Agreements Between Owner and Builder:
Lump sum (fixed price)
- Cap on price and fee
- Limited financial risk to owner
- Contractor takes majority of financial risk
- Contractor does not share project financial information with owner
- Cost savings and cost overruns accrue to contractor
- All changes from plans should be documented by change order
- Ambiguous and/or poor drawings may leave the owner vulnerable to numerous extras and change orders
Cost plus a fixed fee
- No cap on price, yet there is a cap on the contractor’s fee
- Owner’s share of financial risk limited to hard costs (labor and material) only
- All cost savings and cost overruns accrue to owner
- Contractor shares all project information with owner
- All changes from plans should be documented by change order
Cost plus a fee (time and materials)
- No cap on price and contractor’s fee
- Owner has all the financial risk
- All cost savings and overruns accrue to owner
- Contractor shares all project financial information with the owner
- All changes from plans should be documented by change order
Cost plus with a “not to exceed” or “max” figure
- Cap on price
- Cap on fee
- Limited financial risk to owner and contractor
- Cost savings may either accrue to owner or be split with contractor as an incentive
- Cost overruns accrue to contractor
- Contractor shares project financial information with owner
- All changes from plans should be documented by change order
DeMotte Architects | Fairfield County CT Architect | Westchester County NY Architect
Looking for an architect near you in Fairfield County CT or Westchester County NY? DeMotte Architects has over 25 years experience in completing residential projects in Greenwich CT and beyond, and we’re here to discuss your home project. View our past architecture projects in Fairfield County CT & Westchester County NY, or contact us today.