Working Cost-Plus

As most builders understand it, cost-plus construction is a recipe for disaster. How can you sell a job, they ask, without putting a limit on the total cost? And why would anyone in a competitive business like construction want to come right out and tell his clients what his materials really cost and how much he really pays employees? In my 20 years as a builder, I used cost-plus contracts for about half my work, and I’ll admit that it’s more complicated than working with a fixed price. After all, a fixed price contract rewards you with large profits if you buy right and perform efficiently, and the owner isn’t looking over your shoulder every step of the way.