Have, or considering a Cost-Plus Fee Contract for your new Custom Home or Remodeling project in SWFL? If so, you are, or will be, paying considerably more for the work than you have to. Not "you might", you will.
Why do you need NCHCC to provide independent 3rd-party oversight of your Project’s cost?
With Cost-Plus Fee Contracts, who is ultimately responsible for ALL of the construction costs, whatever they end up being? You are. Left unchecked, poor Project cost management by your Builder alone will result in your total Project costs being approximately 3-5% higher than they need to be. That is BEFORE the cost of any changes or upgrades. The numbers are inaccurate from the outset. The first Preliminary Budgets/Estimates you receive are incomplete and inconsistent. Numbers are “spun”. How can you know that the information you’re considering is valid? Then, once Contracted, your Project is to be built in a market that dictates that premium costs be paid for all of the work to be done on it, by a Builder who likely has higher-priority Projects than yours, struggles with Project Cost Management to begin with and who, Contractually, need not be too concerned about what those premium costs for the work are anyway! Further, the Fee for most Cost-Plus Contracts is a percentage of the total job costs. In these cases, as the job costs increase, so does the amount of the Builder’s Fee. So, not only does your Builder have little motivation to try to control your job costs, they, in fact, have a very good reason NOT to try:
The higher the Project’s – YOUR – costs, the more money your Builder makes!
Do most Builders actively seek to exploit these terms? No. The point is that, with regard to Project Cost Management, most Owners with Cost-Plus Fee Contracts have only the “good-faith” efforts of the Builder to fall back on – nothing else. With all the other factors set against them – that’s not enough.
NCHCC has the insight and experience to counter those factors and protect Owners from unnecessary cost overruns. We accomplish this by being proactive and addressing the problem(s) from all angles – all without ceding quality or delaying the job!
The SWFL Construction Industry is inverted – there is more work than there are Qualified Subcontractors to perform it – make no mistake, the tail wags the dog.
As fewer Tradespeople enter the workforce and more of the Skilled age/retire, it will only get worse. Builders struggle to find and retain professionals for their own companies. Quality Administration personnel, including Estimators and Purchasing Agents, in particular, are scarce. Consequently, poor, inconsistent communication and weak, confusing reporting are the norm. Your Builder is competing for all of these resources. How can you know where your Builder stands in this Subcontractor market? When navigating the market, they must consider all of the Projects they have under way. How do you know that they are prioritizing YOUR Project?
The answer = you can’t.
The Industry is also highly networked - from the Builder through the smallest Subcontractor.
There are long-standing relationships in place that were there before you came along, that are intended to still be in place long after your Project is complete. Builders foster these relationships to try to maintain their leverage in the inverted market. In doing so, they become averse to obtaining competitive bids from different Subcontractors for the work to be done. How can you be certain that your Builder is doing all they can to control the costs that ultimately get passed on to you?
The answer = you can’t.
The Cards Stack Up….
Cost, quality and schedule/duration are the (3) main concerns with regard to every construction Project. For each job, Builders are tasked with striking an optimal balance between them. Quality isn’t so much a variable. It is defined by the Plans and Specifications. Schedule is a function of the Scope of Work, which is constantly evolving. It is perhaps the hardest variable to control, particularly in the inverted market. To try to compensate, Builders will hire Subcontractors at a premium. If they really fall behind, they’ll “throw the kitchen sink” at your job – additional manpower, overtime. Whatever it takes, with little regard for the costs of their doing so. Cost tracking, “buy-out”, reporting and administration is difficult and labor intensive. Multiple jobs are constantly being juggled. That means that some must be lower priority than others. If it’s THEIR Project (a Fixed-Price Contract, Model or Spec home), you can be sure that cost will be the priority. But YOU have a Cost-Plus Fee Contract, absolving the Builder of cost risk.
Given all of these circumstances, how can you be confident that all that can be done to control your Project costs, is being done?
The answer = you can’t.
Don’t take my – or anyone else in the Local Construction Industry’s
– word for it!
Ask your friends and neighbors. Most people are reluctant to talk about personal financial matters and nobody wants it to seem that they may have “struggled” to pay for their Project. Yet, specific numbers need not be discussed. The questions are: