I agree with his belief that this contract type is more condusive to collaboration but he has a fuzzy understanding of how it really works.

This post was edited by Renovator8 on Fri, Aug 9, 13 at 23:57

Well it is a complex topic and that article really does not get into any depth. I think as long as you have an honest builder cost plus is the fairest method.

The important issues in a cost plus contract are how will the subs be selected and paid and how will the GC's own forces be paid. Overhead is not a cost of the work unless it takes place on site.

The difficulty is that few home builders or owners are capable of managing the contract without training.

It should not be confused with a Time and Materials contract.

Because it can reduce the owner's pricing control, a Guaranteed Maximum Price is often used. A shared Savings feature is another good idea.

But because most of the costs are from subs, how the GC writes the sub contracts is critical. For large projects the sub contract work is bid competitively after the GC'S is hired and the owner approves the bidders and picks the winner.

This post was edited by Renovator8 on Sun, Aug 11, 13 at 10:57