Let’s face it, construction costs are getting higher and higher. Increased construction costs are the result of multiple factors impacting different areas of the construction process. If it’s not a rise in the cost of lumber, then it’s a change in cost of concrete or renegotiated labor contracts. The open book process gives owners a solution to this problem, as well as the best value for every construction dollar spent.
The open book process ensures the owner is getting the best purchasing power for every dollar spent.
The traditional way of delivering construction services is “bid and build,” whereby a set of plans are produced that are bid upon by several general contractors. This method is not only time consuming, it can also be a source of construction and/or cost problems. In the “bid and build” process, everything must be fully detailed and explained in the construction documents, in order for the bids to be accurate. General contractors often add extra margin in their fixed bids to account for unknown “contingencies”, resulting in higher than necessary costs to clients. Oversights and omissions of any detail during the bidding process can, and invariably will, end up causing conflicts and potential costs overruns due to change orders during the course of construction. General contractor often take advantage of this situation to charge arbitrary “change-order” fees to their clients that drive up project costs.
Alternatively, a contractor who is skilled in offering pre-construction services enables construction to start earlier through an open book process coupled with a flat fee, so the owner is in a better position to save money on the project. This process benefits everyone on the team, allowing input in product and subcontractor selection decisions. An open book process allows the contractor to take part in the early planning process by helping to create plans that are economical to build while delivering on the client’s goals. It helps eliminate adversarial relationships by getting everything out in the open.
An open book process makes sense for the client and the general contractor. We apply a flat fee of 20% on new custom home building projects and all construction and reimbursable expenses are simply multiplied by that fee. By establishing a flat fee, the contractor can contribute in numerous ways to make sure the owner gets the most for their money. Benefits include:
- A phased construction schedule that will fast track projects and result in an earlier completion time.
- The owner’s needs are understood by the same team who is responsible for delivering the project.
- Construction feasibility of the design can be evaluated early in the design phase and modified to reduce building costs.
- Value engineering is an ongoing process that establishes continuous cost information based upon the most economical design choices that meets the owner’s needs. This can include taking advantage of “sales” or “clearances” of building materials, as well as open box products where appropriate.
- As subcontractors and vendors submit their bids, all parties can review them. Sometimes, new subcontractors appear during the construction process, that are hungry for business and willing to offer a lower price.
- If the client elects to perform any changes during construction (add windows, change size of rooms, change finishes, move doors), there are no arbitrary inflated “change-order” fees. Rather the actual cost difference is passed through to the client. In most cases for example, minor framing changes are typically not charged by the framing subcontractor, so there is no cost impact to the client at all, yet they are able to customize their building further to their goals as it is being built.
- Our in-house interior designer coordinates the choices of finishes (flooring, countertops, cabinet materials and layouts, paint etc) with each client according to their individual taste and style, as part of our standard builder’s fee, to ensure an attractive design at the lowest possible cost.