A small to medium-sized commercial project comes with a lot of decision making. It’s important to learn more about the different contracts you should consider for your project. Should you do a design-build? A fixed bid? Time and materials? What are the pros and cons of each?
Here are some things to consider when making your decision.
What is Design-Build?
Design-Build is a process by which you hire a single entity to run your project, and everyone from the architect to the interior designer to the construction manager falls under this entity. You’ll often have a single point of contact who will take responsibility for the overall project.
There are several benefits to these contracts, and also some things to keep in mind:
Pro Tip: Be sure to have an extremely detailed scope list. Be as clear as possible – define the grade of carpet you’re looking for, the number of people you need an HVAC system that can handle so many people, etc. The more detail you define upfront the less risk there is for you.
What is Fixed Bid?
A fixed bid is a bid that a general contractor provides the client with a total price for a build out. It is sometimes a competitive bid, where a client might ask three different GCs to provide a price so the owner can compare and contrast.
Pro Tip: Always make sure you are comparing and contrasting apples to apples. You don’t want a surprise after you went with the lowest bidder that a portion of the work you need done wasn’t included in the bid.
In a fixed bid scenario, the client often begins with an architect. During this phase, the client informs the architect of his or her goals and vision for the space, and after a lot of collaboration, the architect delivers the client and/or the general contractor a blueprint.
As with the other approaches, there are benefits and also things to consider:
Pro Tip: Ask your general contractor for transparency on change orders. An inexperienced general contractor might bid low to get the project, and then look to make a higher percentage on change orders. Ask for back-up on change orders and negotiate the percentage ahead of time. Reputable GCs welcome the transparency and clarity.
What is Cost Plus (also called Time and Materials)?
Cost Plus, otherwise known as Time and Materials, is when you as the client are charged what it takes to get the job done- nothing more and nothing less. There are a few things to keep in mind when using this approach:
Pro Tip: This option is best for people who have a tremendous amount of trust in their general contractor and/or they are very educated and willing to be involved in the construction process.
What option is best? Not surprisingly, that depends on the project. Design build is often a strong choice because the entire team is working closely together with your end goal in mind. But you need to have a high level of trust in the team you choose. A fixed bid is a great choice for clients who want to be hands off and turn over the project to trusted professionals. Once again, you need a reputable general contractor. Cost Plus is a fantastic option if you are construction-savvy and plan to monitor the project on a very regular basis. You need to walk in with eyes wide open though- you could spend more than you intended but you could also come out ahead.
At the end of the day, we suggest you ask around for recommendations from people in similar shoes. If you are building a restaurant, ask other restaurant owners. When you keep hearing the names of certain architects and general contractors over and over, you can go to them for advice on the best path for you.