Negotiating a Guaranteed Maximum Contract
One of the most terrifying steps in any construction job is the negotiation of the contract. You, as the homeowner, want to make sure you’re paying a fair price and not being taken advantage of, and the contractor wants to know that their value is appreciated and that they are being fairly compensated for their work. So how do the two sides come together to each feel good about the contract, especially a guaranteed maximum contract?
As a homeowner, you are most likely not familiar with building practices. After all, you don’t use a contractor very often. You may not know just what things like labor and materials should cost. And you may not know how to negotiate a contract that not only protects you, but creates a favorable atmosphere concerning the building process.
The good news is that you don’t have to go it alone. Först Consulting Group offers a range of homeowner services to help you select and vet a contractor, negotiate a contract, and ensure that the work is done correctly and to your satisfaction.
One recommendation in creating the contract is to negotiate a guaranteed maximum contract. This ensures that the contractor will not charge over the agreed-to contract amount, as long as the scope of their work does not change.
For example, if your contractor agrees to enclose an open porch to create a sunroom or an all-season room, you can be given a guaranteed maximum price for the proposed work. If, however, that contractor finds that there is severe damage to the underflooring or discovers once he begins construction that the supporting wood is compromised and needs to be replaced, he can issue a change order that includes the necessary repairs on top of the contracted amount. Change orders usually occur when unforeseen issues that may not be visible to the naked eye arise, such as wood rot that is uncovered once the subflooring or walls have been removed or opened up.
If damage is suspected in the original inspection, an estimated cost may be included in the contract as an allowance. This allows the contractor to fix the damage and charge up to the amount of the allowance. If the costs go over the allowance, the contractor must issue a change order, which then increases the total guaranteed amount of the job.
Guaranteed maximum contracts are a good way to control costs, however, we must realize that they offer no guarantee that there will not be additional charges. For additional work that is required above the scope of the original quote, contractors do have the right to charge additional fees. Still, a guaranteed maximum contract offers peace of mind and security in laying out the costs of a construction job.
Först Consulting Group Helps Homeowners Negotiate a Guaranteed Maximum Contract
A Först Consulting Group consultant can helps homeowners in the Northern Virginia and Washington DC metro area understand a guaranteed maximum construction contract so that you know exactly what to expect from your contractor and avoid unwelcome surprises. We will review your contract with you, explain details, and offer you the opportunity to air concerns or ask questions before you sign. We can even serve as the go-between between you and your contractor. With complicated legal language, understanding and negotiating a contract is never easy. But with Först Consulting Group on your side, you have the experience and knowledge needed to strike a deal that will be welcome to all. Contact us today.