Pricing Options
Blue Ribbon Residential Construction maintains significant relationships with GE Capital, Capital One Home Improvement Financing and other lenders. We can help homeowners with financing and offer several pricing options, depending on the project. For our design/build projects, Blue Ribbon Residential Construction generally prefers a Cost Plus agreement, which is fair to both parties and favors neither the homeowner nor the contractor. Fixed Price may be appropriate for some types of straightforward exterior work, such as siding.
Cost Plus Agreement
The majority of projects handled by Blue Ribbon Residential Construction fall under the Cost Plus agreement, where all costs are tracked and only time and materials dedicated to your project are billed. Production efficiency is based on a normal crew working a normal day. Labor efficiencies for budgeting are based on the current year’s Remodeling Cost Book from BNi Building News, which since 1946 has been the nation’s most comprehensive source of construction books, building codes, legal forms, cost estimating tools and other reference materials for the building trades.
Cost savings through efficiencies flow back to the owner as savings on the overall project. Any change orders are billed at the going rate. There is no excess profit for the contractor. Change orders are still used, but only for information and clarification.
All costs are tracked and compared to the target budget. With a Cost Plus agreement, Blue Ribbon invoices the client weekly based on job flow, current bills and time cards. All costs for the period are tallied, and the General Contractor adds a specified percentage to cover the company’s overhead and profit.
Highlights of Cost Plus
- Labor
The agreement specifies predefined labor rates for all employees and trade professionals participating in the hourly rate plan. Every person who works on the job - whether supervisor, expediter, master or journeyman electrician, plumber, carpenter or even the homeowner - is classified, based on his or her qualifications and experience. The hourly rates encompass all costs associated with that person’s pay, taxes, workmen’s compensation insurance, benefits and health insurance.
We will provide an on-site time clock, where everyone on the project clocks in and out. Expediters and pick up and delivery personnel will keep time on a Palm Pilot, indicating the time procuring materials for your job with detailed descriptions of time usage. Supervisors will also keep time on a Palm Pilot while doing off-site work for your project, including making material lists, job schedules and phone calls.
Time is then calculated and billed based on the person’s classification and rate. Production time includes normal work breaks, job setup in the morning, job takedown in the afternoon, daily cleanup and rain delays during the day. - Trade Contractors
Trades not participating in the hourly rate plan will provide fixed quotes for their portion of the work and are billed based on the project quote. - Materials
Materials, debris disposal, and miscellaneous purchases for the job are billed at contractor invoice cost plus the standard markup. - Rental Equipment and Specialty Tools
Rental equipment is billed the same as materials. Contractor-owned equipment, such as dump trucks, track hoes, loaders and dumpsters, are billed at a specified rate, just as if they were rented.
Fixed Price Agreement
With this type of agreement, there is a set price for the work as outlined in the specifications and plans. This set price is adjusted based on allowance selections and unforeseen site conditions, such as bad ground in the area of construction, termites or deficiencies in the existing structure. Regardless of the accuracy of the estimate, there is always a built-in 5-10% contingency factor.
This contingency factor covers estimating errors, material cost increases during the project, logistical considerations with equipment and materials, unforeseen structural engineering as required by building inspectors, unforeseen damage to personal property, additional wiring and plumbing in walls to be dismantled, as well as unusual construction techniques in the existing structure.