In the San Juan Islands 3 different kinds of contracts are used by builders to form the relationship with their clients: Cost Plus
Fixed Sum
Project Management.

Cost Plus Contracts
Locally the most-used contract is the “Cost Plus Contract.” It is sometimes referred to as the “Time and Materials Contract.” It establishes an agreement to build on the basis of whatever and however much undetermined time and materials that’s required for the building, and adding a 15%-20% overhead and profit factor. This contract is the province of the fiscally ever-hopeful. It does not require a lot of lead time to precisely plan any construction. In the state of Washington a sales tax is then added to this. The exact sales tax varies from 7%+ to 8.6% from county to county. In San Juan county the exact sales tax is currently 7.7%. This tax is paid directly to the state mostly quarterly. But it is required that it be collected upon receipt of each payment.

Some folks prefer this cost plus form of contract because it allows for the maximum flexibility in the designing and building process vis-a-vis change orders, payment arrangements, etc.
Fixed Sum Contracts

The second most-used kind of contract is the Stipulated Sum Contract. It is sometimes referred to as the Fixed Amount Contract. This form of contract requires sufficient lead time and an upfront commitment from the contractor. It requires a reasonably complete set of plans and specifications to be used for bidding purposes. Costs can be determined for any project based upon planning. Frequently problems lurking just out of sight are found and resolved prior to work through the bidding process. Experienced contractors who are confident in their business and bidding skills can do their clients a service by providing this real cost analysis.

SoundHouse provides fixed-sum line item cost breakdowns to their clients for a fee which is paid for as a pre-construction service. If we are selected as the project contractor, this fee is rolled into the overhead costs of construction. In brief this kind of contract can be characterized as “this is exactly what we’re doing, and this is exactly what you’ll pay”.
Project Management Contracts

The last standard contract form is the Project Management Contract. In this contract there is an agreement for a fee to provide project planning and oversight, and to contract out all labor and materials. Frequently this arrangement puts a superintendent on site full-time who is the clients’ representative.

SoundHouse offers construction management services to our clients. Line item cost breakdowns always accompany our proposals to do work. We can provide a complete project bid early in the design process, or assist you in tuning your budget by pricing alternative windows, roofing, and finishes.