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Alex Graham asked:

Jan 13, 2015
Cost Plus versus Lump Sum: What are the pros and cons of each?

Bruce Wiegan of BNW Builders PRO answered:

Apr 18, 2015

Abe has given you a great answer.

With a lump sum contract, all the risk is placed on your contractor. If you want assurance, a lump sump contract with a professional remodeler will give you a guaranteed price... but be sure you have a clear understanding of change orders and hidden condition clauses in the contract, as well as finding out if any allowances are realistic. Cost plus, you take on all the risk. Everything is billable, and the contractor has no risk for this. In return, you might be charged a lower markup. So if you are willing to take on some risk or if you have a highly evolving project, a cost plus contract might help you. You must have a clear discussion of maximum price and be prepared for price escalation, though. Any other question on the subject?

Jan 14, 2015

Good answer by Abe. We prefer to use fixed contracts with our clients. We have clauses in our contracts for unforeseen itesm such as concealed structural damage or inadequacies. I fully agree a professional remodeler, that knows what they are doing, should be offering a fixed contract.

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