The Importance of a Fixed Price Contract

The Importance of a Fixed Price Contract

What is a Fixed Price Contract?

A fixed priced contract means the construction company and client agree on a set price for the job from the start. This is different from other contracts where the price can change based on the time taken, materials used and/or material price increases.

How will this affect me?

One of the main benefits of fixed-price contracts for owners is that they provide certainty and predictability of the project budget. Owners can avoid cost overruns, unexpected changes, and additional payments that may arise from other types of contracts, such as cost-plus or time-and-materials. This encourages the builders to complete the project on time and within the agreed scope, as they bear the risk of any delays or errors.

While it may seem like home builders get paid a lot of money and do very little, the truth is a little different. In fact, the average building company makes little or no net profit, an alarming fact if you are seriously considering building a new home. It’s for this reason you really don’t want to be choosing the builder with the lowest price – unless you are prepared to finish the job yourself when they go out of business!

However, when you deal with a professional builder, one that knows their numbers, you don’t have that problem. You agree on a fixed price for a fixed outcome on a fixed date. It may seem like a minefield you’re stepping into, but with the right builder, building a new home is an exciting experience that you will want to repeat. The trick is, to make sure you choose the right builder.

At BGH Construction, you can me rest assured that you are taken care of. We take pride in our processes and want our clients to enjoy their renovation journey, this is why we follow a well-structured process from start to finish to limit the unwanted stress in their building experience. If you have any other questions, be sure to contact the team or leave an enquiry.


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