Support & FAQ
I wanted to create a page that would help you to understand some of the terms that I have used throughout this website. For individuals who are unfamiliar with the process of building a new home, sometimes it may seem daunting. If you've talked to friends or people you meet who currently own a home here and they have repeated the horror stories of building a new home in the mountains, it's no wonder so many decide against doing it.
Like any big endevor in life, it's best to educate yourself so that you can make the best, informed decision for you and your family. I've always tried to help my clients to understand and feel comfortable with the process so they can focus on the more enjoyable parts of building their new home. I hope I can help you too so if you have any questions please feel free to email me.
I look forward to talking with you.
WHAT IS A COST-PLUS-FIXED-FEE AGREEMENT?
The Cost-Plus-Fixed-Fee agreement is, in my opionon, fair to the owner because it provides him with the opportunity to pay only for the actual cost of the work, plus a "fixed fee" covering the contractor's profit and overhead. With this type of agreement the contractor has no financial incentive to increase project cost since he is not paid a percentage of these higher cost. Rather, the contractor has an incentive to perform the work quickly and well because the sooner he completes the job, the sooner he collects the balance of his fixed fee and begins another project. If he can save the owner money through more efficient methods which require less labor, use materials more efficiently or if the owner is able to purchase materials at a discounted price then the owner will retain those savings.
Also, if the owner doesn't have a fully detailed set of plans, which is often the case or wants the contractor to spend more time on value engineering - that is, common sense cost-saving ideas - the contractor is better able to provide these because he is not roped into a fixed price and fixed scope of work where every change requires the preparation and issuance of a "Change Order". However; once work begins, the contractor must take care to track any significant increases to the scope of work because he will normally want to increase his fixed fee accordingly.
WHAT IS A COST-PLUS-PERCENTAGE-FEE AGREEMENT?
The Cost-Plus-Percentage-Fee agreement is identical to the preceding Cost-Plus-Fixed-Fee agreement except that the contractor's fee is not fixed in the contract at a predetermined amount. Rather, the contractor's fee is calculated as a percentage of the cost of the job (labor and materials). This percentage is typically in the 10% to 25% range depending on the size and scope of your job, the company's overhead and supply and demand.
This type of contract is often used if details about the job are unknown, the scope of work has the potential to increase or decrease and selections of products has not been determined. This type of agreement is also commonly used in a renovation type project where the scope of work is likely to change. In order to get the process of construction going this contract can usually be quickly agreed upon so things can move forward.
WHAT IS A FIXED-PRICE OR LUMP-SUM AGREEMENT?
A Lump-Sum or Fixed-Price agreement is often preferred by Owners because they feel they have a fixed price of what their job will cost. A Fixed-Price agreement is often used by subcontractors for smaller jobs with an easily definable scope of work and materials needed but, I have found that in the case of a custom home with a lot of unknown details before the project starts, a Fixed-Price agreement creates complications for both the Owner and the Contractor.
In order for a Fixed-Price agreement to work well, all aspects of the construction should be clearly defined, building plans completed, all selections for finishes should be predetermined and the scope of the work should stay as true to the original plan as possible. Even a very experienced builder can make mistakes when trying to calculate every detailed cost to build your new custom home. In order to adjust for the possibility of making a mistake or a miscalculation he will add in a percentage to the "fixed price" to cover the cost of that possibility. For anyone who has built a home before, there are often surprises throughout the course of construction and those possible surprises will need to be calculated in the fixed price as well in order for a contractor to make any profit on a job.
In addition, the Owner may make changes along the way which, must be documented in the form of a "Change Order" in a Fixed-Price agreement or the contractor risks loosing a large portion of his profit to undocumented and unpaid changes. Change Orders are unexpected additional cost to the job, whether initiated by the client or due to unforseen circumstances. If the change is not propertly documented and discussed before or at the time of the change then it could lead to disagreements between the client and contractor.
WHAT IS A CHANGE ORDER?
The most common Owner/Contractor dispute is over change orders or a change in the original scope of work. The best way to avoid disputes over change orders is to establish a clear policy on what amounts to "extra work, additional work or change order work," and how this work will be identified, carried out, and paid for when it is encountered during the construction project.
No construction project, any more than any other human endeavor, is ever perfect. Therefore, if that cost is not included in the agreement's scope of work, it will be identified as additional or extra work and will proceed as a written change order. A signed change order will almost entirely eliminate disputes over the obligation to pay for the work completed. Having a Change Order Contingency Fund is always a good idea.
WHAT IS A CHANGE ORDER CONTINGENCY FUND?
Nobody likes change orders!
For you, the Owner, they present an unusually unanticipated expense. For the contractor they tend to delay the project schedule and require a greater amount of administrative time in proportion to their cost. Nevertheless, we have found that even with the best of construction plans, some change orders are likely to arise.
Based on our experience it is anticipated that change orders may arise as a result of both Owner requested upgrades from current plans and Contractor requested changes arising from either concealed conditions or actual site conditions that vary from those described in the construction drawings or initial discussions.
Therefore, it is recommend that you initially budget a percentage of at least 5% to 15% of the estimated project cost as a contingency fund for both Owner requested and Contractor requested change orders. This percentage is an estimate only. The actual total amount of all change orders for your project will vary based upon such currently unknown factors such as:
- The number of Owner requested changes, upgrades requested during the course of the project.
- The possibility of encountering concealed conditions during the work, an example would be rock encountered during excavation in your house site.
- The degree of completeness or lack of, and amount of details shown or discussed in the construction drawing and estimation phase.
WHAT IS AN ESTIMATE?
According to Webster’s New World Dictionary:
Estimate - An opinion, to determine roughly, a rough calculation, an approximate computation.
An approximate computation of the probable cost to build your project should not be an “off the cuff” figure. Arriving at a “meaningful” estimate requires careful work, and throwing out a figure that could very easily be wrong, would be a disservice to everyone involved.
HOW DO I COMPILE A "MEANINGFUL" ESTIMATE?
I generate an initial estimate from preliminary information:
- Knowing the clients budget
- Review site conditions, septic and survey
- Require a complete set of architectural plans
- General idea of interior and exterior finishes
- Any specialty items the client desires
Estimating the construction of a custom home on difficult mountain terrain is not an easy task. It could take a lot of work and several hours to develope a meaningful estimate. The longer the time spent the greater the chance of getting a more accurate estimate. Depending on the detail of the estimate expected, a fee may be required.
WHAT DOES IT COST PER SQUARE FOOT?
Basing the purchase of your new home on the cost per square foot is a lot like basing the purchase of your next new car on the cost per pound to manufacture that car. One can not reduce a unique creation, like your customhome, to a product that is manufactured on an assembly line or a commodity like rice or gold.
DO I WORK WITH EMPLOYEES?
The only employee of the company, other than myself, is my brother Scott Moore. Scott moved to Glenville and started the business with me. Scott has spent that time with the company building everything from timber frame to stick frame homes, concrete to interior finishes and more.
Scott has been helping me by loyally doing all of the jobs that it seems everyone else doesn’t want to do and helping to supervise the jobsite construction. He assists in checking on the jobsites and makes sure they are clean and organized. It’s mostly a thankless job but he plays a very important role in Moore Construction’s success and I’m very thankful he is around.
Moore Construction also owns a trackhoe machine and Scott can do small excavation, driveway, landscaping and trenching work as well as all the other odd jobs he does for the company.
DO I WORK WITH SUBCONTRACTORS?
Most General Contractor’s know that they are only as good as their subcontractors or employees. I consider myself very lucky to work with a great group of people. I believe they are some of the best in this area. The man pictured on the left is the owner (Tom) of my framing subcontracting crew. Tom and I have been working together to build beautiful mountain homes since 1998. Tom has been in the field of construction all of his adult life working in both commercial and residential construction. Tom and his crew not only frame the homes for Moore Construction but they also do all of the trim detailing, lay the wood floors, install or construct the cabinets and everything else in the house that is related to wood products.
Most all of the subcontractors I work with have worked with me for over 3 or 4 years. I feel very comfortable with their level of professionalism and the quality of their work. From my plumber, electrician, gas company and heating and air guy to the framers, tile guy, drywaller, trim carpenters, roofer, painters and even my building suppliers. I would like to thank them for years of working together because I know that my success is due to and dependent on their ability to pay attention to the details and completing their job on time.