Cost Plus Home Construction


I would like pros and cons about “cost plus 10%” construction loan when building a new house.


Architects see Cost plus as a dangerous way to build and this would be more so for the owner builder. As there is no fixed price the builder is effectively charging an hourly rate and may feel no compunction to work fast and efficiently. The owner will have no idea of what the final expenses will be.

On the other hand Architects will use this system if they implicitly trust the builder to do the right thing. The building can be built cheaply, because the builder doesn’t need to factor in a variable for the potential cost of unknowns. Usually used for small works on existing buildings rather than large new projects.

Answered over 9 years ago
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