Homeowner Forum / Construction / February 2005

Every form of agreement has its own risks and rewards.

It is not clear from your post whether you are building for yourself or
for a customer.

In any case, both parties are protected by:
A client who understands and is committed to the design;
A contractor who is honest, a good craftsman, and a careful manager;
A complete and accurate set of contract documents agreed to by both
parties;
A detailed estimate or bid in hand before start of construction
Changes made only with written, signed change orders in hand;
Change orders showing complete description of materials, quantities,
and costs.
Willingness by both parties to negotiate differences of opinion.

TB

Trevor, it's not clear whether you are looking for typical markup on a
spec house ...  a typical markup on a custom house ...or advice on a
percentage fee for a cost plus project.

But even knowing that, it's tough to offer you anything much beyond
some generalizations.    If you are working on a cost plus basis,  the
contractor is exposed to less risk and therefore can charge a little
less.    Cost plus works best with parties who have a history working
together,  and who are both knowledgeable.  

Rates vary dramatically ...  a two hundred thousand dollar home
requires almost as much management as a six million dollar home, for
example.

I'd talk with  your local homebuilder's association,  the city
building department ... and friends who've had homes built.  

Ken