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how does a contract for a new construction of a home work when the builder is charging a percentage

FloridaConstruction Contract

In our home construction contract, it says the homeowner will pay the subcontractors and vendors directly, the builder will be paid 15% of the cost of construction and that the builder cannot add fees to anything. So - my questions are 1) what is considered construction cost. Obviously things like framing, but what about lights, landscaping, etc. and 2) the finish carpenters actually work directly for the builder and we are being billed for their time. The charges for his finish carpenters seem exorbitant. I suspect he is adding profit onto those charges and then expecting to charge another 15% builder fee on top of that charge. Does this seem kosher?

1 reply

Jan 24, 2022

This forum is for contractors, but your question is an important one for the construction industry. "Construction Costs" should have been defined by your contract. It appears that it was not, so I think a reasonable definition would all of the costs and expenses of the construction project. In some amount the lights and landscaping you mention could be building code requirements and the contractor is responsible for all code compliance. As for the contractor's use of its personnel, there is a significant expense associated with this, and, they have to be managed. The management of those workmen is not part of the contractor's percentage fee. You cannot reasonably expect that the contractor is going to receive only the exact costs of his employees. I think that the proper way to look at this is that if the framing was subcontracted what would that expense be? In my opinion it would be reasonable for him to charge as a framing contractor minus 2-5%. The contractor is getting some benefit from the project by being able to keep his workmen busy, so he should be willing to give you some discount. He might not agree with me about this, but you should speak with your contractor about it. You might find out that you are getting a deal on the framing. If you don't get satisfactory answers you can consult with another contractor, for a fee, and get another opinion.

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