Methods for Determining Prices | Treated Wood

Methods for Determining Prices

  • Unit-price contracts

    This type of contract is based on a given rate per unit of measurement. A good example of this would be backfill or decorative stone added to enhance the beauty of your outdoor living space. These types of things can be charged by the cubic foot or yard or by a specified area.

  • Fixed-price contracts

    A Fixed-Price Contract or Lump-Sum Contract is one which lays out the total price for the work on your building project. This would include all labor, materials, equipment rentals, subcontract work, and other expenses. It must be clearly stated in this type of contract whether taxes are included in this price or in addition to it. These contracts are best suited to smaller repair or renovation projects that are straightforward, easy to plan and have little chance of unforeseen circumstances interfering with the work’s successful completion. If there is a change or adjustment made to a fixed-price contract, it is required to be signed by both the homeowner and the contractor.

  • Cost-plus contracts

    A Cost-Plus Contract is similar to a Fixed-Price Contract, but it is based on the cost actually paid for materials, labor, subcontracted services and other direct expenses with the addition of a fee to cover the contractor’s time for managing and coordinating all aspects of the project. The added fee can be a percentage of the total costs or a fixed amount after all expenses are paid. This type of contract is commonly used when larger renovation projects are done and when the exact extent of the work to be done is difficult to determine in advance. A project budget should be set out in the contract with estimated costs for the major elements of the job. It is usually advisable to add a maximum budget to the contract to ensure that the project costs are kept under control. This type of contract is not commonly used when building a deck.

  • Design-build contracts

    A Design-Build Contract is generally a variation of either a Cost-Plus Contract or a Fixed-Price Contract. Its distinguishing feature is that the homeowner signs just one contract for the whole building project rather than one for the design and another one for the construction work. In this case, the contracting firm designs and builds the project. This kind of contract usually covers custom home construction and large-scale renovation projects. An example of this would be if an architect manages an entire custom home project. He designs the home and then hires contractors to do the actual construction. More often than not, the design-management fees are a percentage of all costs. Once again, this type of contract is not generally used when building an outdoor living space unless it is very elaborate.