Financial Programs
Inquire about our financial protection plan.
~No longer do you need to be at financial risk if your contractor fails to meet his obligations
Contract pricing: Fixed cost including fee with specifications.
Cost w/ fixed fee: Cost of construction plus fixed % fee based on allowances (with limits).
Cost plus: Actual costs plus a % fee (no limits) based on a cost estimate, adjusted based on actual cost.
Construction management: % fee without financial services based on a cost estimate, adjusted on actual cost.
FINANCIAL PROTECTION PLAN
It is our goal to provide our clients with exceptional service in all areas of the construction process. We consider all aspects of the process important and vital to the overall building experience. For that purpose, we have developed the following program for the protection of the owners, lenders, contractors, suppliers and subcontractors. There’s no reason why anyone should be at unreasonable risk and this program addresses those concerns.
1) The owner negotiates and reaches agreement with a lender of their choice.
2) The owner and contractor open a joint checking account at the lenders institution. This account requires the electronic approval of the owner and the signature of the contractor to release a valid check.
* Protects the owner or contractor from the other spending funds on any purchases not within the scope of the project, without full knowledge and consent of the other.
*Insures the owner and contractor will discuss the disbursement of funds based on the budget and satisfaction of the services rendered.
*Insures the owner and contractor will address any over-runs or savings immediately. Over-runs must be funded immediately via the contingency category on the budget report or new funds. Savings will roll over into the contingency category on the budget report for future use.
3) The contractor will submit all invoices payable with a separate invoice for the contractor fee on the 1st and 15th of each month. These invoices will be submitted to the owner (and lender if needed) electronically for approval, within 24 hours. The lender agrees to fund the checking account upon owner’s approval of the invoice submission, within 24 hours. There’s a maximum of 48 hours to fund the checking account from the time of the electronic submittal to the owner, as checks will be mailed upon owners approval.
*This will allow the contractor to pay his suppliers and subcontractors in approximately two weeks and gives the contractor the leverage to provide you with the most qualified suppliers and subcontractors’ at the most competitive pricing. This will also result in better scheduling because your project will be a priority for those who know they will be paid promptly.
*The contractor can’t use the funds intended for your project to fund other projects. Your funds are used only for your project. The only funds the contractor has control over is the contractor fee and then, not until he has earned it and it’s released through the approval and check process, just like any other supplier or subcontractor. The result of this is that you never pay out more value than you have in the project. If your contractor fails, in any way, you may have an unfinished home but you will have the equity in the home and the funds to complete it. In order for this to work, the owner and the lender will need to be added to the contractor’s credit accounts (for your specific project only) as a responsible party for payment. This will be done through a letter to the suppliers and subcontractors.
4) The contractor will submit along with the invoices a budget report giving you an up to date accounting of your project. This report will include, by category, the budget, actual expenditures, difference percentage, difference dollars, cost per square foot, contingency funds available, total hard costs, total overhead & profit and total cost of the project. You will know exactly where you stand twice each month and at that time all materials and services in your home are paid.
5) In the case of an owner funded project, the owner becomes both owner/lender and assumes the responsibility for the lenders role.
6) As a custom builder, we prefer to work on cost plus. However, cost plus is not a blank check. We take the time to put together an honest and realistic cost estimate. Once that’s established you are in control of all expenditures, it’s our job to provide you with the information and advice to make good decisions but, the decisions are yours. We will require you to fund changes prior to performing any added services and we will manage your project to insure an agreeable quality level, on budget and on time construction project.