Bid verses cost plus By Greg Jordan    What is a bid and how does it compare to cost plus. The bid is the most common form of determining the cost of a construction project but may not be the most cost effective way to proceed. Cost plus is another alternative that could potentially save a family money when planning a remodel, addition or new home.    A bid is a way to determine, from a builder, how much a specific job will cost. This bid will be a firm price that has been compiled by the builder taking into consideration the cost of the individual sub-contractors and everything else that a specific construction project will need to be completed successfully. In the case of a new house this will require a complete set of plans and specifications and could take a considerable amount of time to compile. All contractors must add percentages to the building material cost and labor estimates in order to allow for un-foreseen situations that occur during a building project. In all cases the contractor must consider the worst case scenario and bid high in order to cover all of their expenditures. If the worst case scenario doesn't transpire then the builder gets a financial wind fall but if the worst case does happen then the builder still makes money.    A cost plus is the cost of materials plus labor. If you have a builder you trust you can often times save money with a cost plus agreement. All builders inflate their materials cost and their labor cost. With cost plus a builder will estimate how long it will take to complete a project. If the project takes less time then estimated, the homeowner pays less money because they are only billed for the hours worked. Material costs will remain the same as in a bid and can be estimated fairly accurately. It is important to work with a builder who is familiar with cost plus jobs and has a verifiable track record with this way of doing business. Whether you choose a bid or cost plus, always be sure that you select a reputable builder who you can trust. Greg Jordan is the owner of Omountain Homes and has been building & remodeling homes since 1986. He does projects throughout central Texas. Omountain Homes can be reached by calling 847-5507 or 557-4790 or you can e-mail them Close this window