Why Powell Construction?

  • Established in 1990
  • Design-Build Experts
  • Clear Communication
  • Detailed Estimates
  • Fixed Price Contracts
  • Printed Schedules
  • Many Repeat Customers
  • Award Winning Designs

Why a Fixed Price Contract?

Itemized estimates and fixed price contracts result in greater homeowner satisfaction. The reason for this is clear expectations. It’s in the homeowner’s best interest to get a commitment on price up front. Why a Fixed Price Contract?

A homeowner asked me recently why she should contract for remodeling on a fixed price basis instead of an hourly basis. Some contractors bill “time and materials”, charging their hourly rate plus all costs. What’s wrong with this type of arrangement?

With a time and material contract the homeowner has no concrete idea of the financial commitment she is getting herself into. What does she do if part way into the project she realizes that she’s spent her entire budget but the project is only half way complete? Contractors tend to be optimistic. They hope a project’s costs will come in low and the homeowner will be thrilled. Unfortunately, unless the contractor does a detailed estimate he will often be surprised himself at the entire project cost. This doesn’t mean that the contractor is dishonest in giving an optimistic picture of what the entire project might cost, but he truly doesn’t know until he adds it all up.

The reality is that fixed price contracts result in far fewer lawsuits than their time and material counterparts. The reason for this is clear expectations. Time and material contracts can be very ambiguous regarding billable costs. Who pays for cell phone usage related to the job? Who pays the worker’s compensation insurance? What about the porta potty, driving time, bookkeeping, etc.? The homeowner may have an expectation regarding these issues but this may not match the industry standard or the contractor’s expectations.

It’s in the homeowner’s best interest to get a commitment on price up front. The contractor should provide an itemized estimate showing what’s included in specific language. Clear communication via detailed drawings, a written estimate, a fixed price contract, and an established payment schedule result in happy remodeling endings.

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