What is a cost-plus contract in home building?

A cost-plus contract prices the home at the actual cost of labor, materials, and subcontractors, plus a builder's fee, usually a percentage or flat amount. The total is calculated as the project proceeds rather than fixed at signing, so it moves with actual costs.

What is a fixed-price contract in home building?

A fixed-price contract, also called a stipulated sum, sets one agreed total for a defined scope before construction begins. That number holds unless the scope changes through a signed amendment, which places cost-overrun risk primarily on the builder rather than the owner.

Which contract type is more common in design-build?

Both appear. Cost-plus is common where design and estimating run alongside early construction. Fixed-price is common where design is finalized before a price is committed. Which a firm uses comes down to how it sequences design against construction.

Do change orders work differently under each contract type?

Yes. Under cost-plus a change order is added at actual cost plus the agreed fee, like everything else. Under fixed-price it is a negotiated amendment to the stipulated sum, because the original number was priced against a locked scope.

Does a fixed-price contract mean the final cost cannot change?

No. The agreed scope is locked at a set number, but the total can still move. Approved change orders adjust it, and so do allowance reconciliations, where a selection lands above or below the placeholder written into the contract.

How does Jenkins Design Build structure contracts for custom homes?

We use a fixed price design-build contract, finalized during pre-construction once the design is complete. Because architecture, interior design, and construction are handled under one roof, scope and cost are settled early enough to commit to that number before construction begins.