The Number You Sign Is The Number You Pay
How do you know the number a builder quotes you is the number you’ll actually pay?
And what happens if they missed something in their own scope?
In this post, you’ll learn how a fixed-price contract works on a complex custom home in the Berkeley Hills, what our paid pre-construction phase settles before anyone signs, what stays outside the contract price, and how we hold a number on a hillside lot.
How Do Custom Home Builders Avoid Surprise Change Orders?
Custom home builders avoid surprise change orders by setting the price only after a paid pre-construction phase has settled the full scope.
That phase collects hard bids from every subcontractor and vendor on every line item, resolves conflicts in the plans, and locks material selections and long-lead orders.
The fixed-price contract gets signed after that work, not before it.
How A Fixed-Price Contract Keeps Surprise Change Orders Off Your Build
A fixed price keeps change orders off your build by moving all the guessing to the front, before anyone signs anything.
At Vought Construction, we charge for a Professional Services Agreement first, and finalizing that bid can take six months.
Hard bids from every subcontractor, on every line item.
Hard bids from every vendor, on every line item.
Conflicts in the plans that need more detail get resolved on paper during pre-construction, not in the field on the morning the framers show up.
What you sign at the end of that is a real budget.
Not an estimate.
And if we missed something inside our own scope, we honor the number anyway.
An estimate protects the builder.
A price we already bid out, line by line, protects you.
Why The Price Is Set Only After The Full Scope Is Known
The price comes last because a number set before the selections are made is a number nobody can hold to.
Tile spec, window package, appliances, and interior door hardware.
Every one of those carries a real cost, and we don’t know it until you’ve picked the thing.
So we make those selections during pre-construction, take bids against the actual choices, and price the job off that.
A builder handing you a number before the selections exist is handing you an estimate and calling it a budget, and that swap sits behind a lot of the custom home planning mistakes we see.
Three to ten thousand dollars up front buys you the difference, and it’s one of the more reliable ways to save money on a custom home precisely because it happens before anything gets built.
Trying to build the plane while it’s already in the air costs a lot more than that.
How A Fixed Price Differs From An Open-Ended Time-And-Materials Job
The difference is the ceiling.
A fixed-price contract has one, and a time-and-materials job, also called cost-plus, does not.
Cost-plus is what it sounds like: whatever it costs, plus the builder’s fee.
The contract can just keep going.
Nobody writes change orders on a cost-plus job because there’s no fixed number to change from.
You keep making decisions, and the original budget is still the real number in your head.
Month ten of a twelve-month build, you’re already at budget.
Then you have the uncomfortable meeting every week until it’s done.
Cost-plus gets sold as the transparent option.
We don’t buy that.
The margin doesn’t vanish on a cost-plus job; it moves.
It gets spread across other categories, or the builder marks up their own employees enough to land on the same number.
Same margins, and no ceiling on what you pay.
What The Paid Pre-Construction Phase Settles Before The Contract Is Signed
The pre-construction phase settles five things before we put a fixed price in front of you:
- A realistic schedule, built as a Gantt chart, after we’ve asked every sub about their actual availability and how long their piece takes, which is how a custom home timeline stops being a guess.
- Sign-off from the consultants on the job, including the structural engineer and the geotechnical engineer.
- Hard bids from every subcontractor and vendor, line item by line item.
- Finalized orders on long-lead items: windows, doors, tile, and appliances.
- Exploratory demo on a remodel, so we find what’s behind the walls before we price them.
Windows are the usual culprit.
A window order can take a month to two months of back-and-forth between you, your architect, and the vendor before every detail is right, which is one reason architect and builder collaboration matters more during pre-construction than it does during the build.
We finish that during pre-construction and finalize the order.
The vendor gets no money until the construction contract is signed.
Drive around Oakland or Mill Valley, and you’ll pass new homes sitting still, waiting for long-lead items that nobody had settled in advance.
What Sits Outside The Contract Price, And Why We Say So Up Front
Five things sit outside the fixed price, and we name all of them before you sign:
- Unforeseen conditions we couldn’t see until we opened up the walls.
- Changes you decide to make after the contract is signed.
- Permit fees, which you usually pay the city directly.
- Consultants like the welding inspector and concrete testing.
- Curveballs from the city after your permit was already approved.
We say it up front because a number you don’t fully understand isn’t certain.
That second item costs more than people expect, and not because of the material.
Add a window mid-build, and the framing goes out a week.
The plumber gets pushed a week, but he isn’t available that week, so he goes out the next week.
Now the electrician can’t get in either.
There’s a misconception that contractors like change orders because that’s where the money is.
Changes wreck our schedule.
Unforeseen Conditions Behind The Walls
Unforeseen conditions are the one genuine surprise left, and they show up on remodels far more than new builds.
Old homes don’t tell you what’s inside them until the walls come off, which is what makes budgeting a historic home renovation different from budgeting a new build.
We shrink that risk with an exploratory demo during pre-construction, opening things up on purpose so we can price what’s actually there.
It doesn’t catch everything.
We tore the stucco off a house once and found no studs in the walls.
Termites had eaten them.
Exclusions And City Curveballs
Permit fees are outside the contract, and if you want us to handle the permit process, we charge for our time and the associated fees.
Same with the specialty consultants, a hillside job pulls in: the welding inspector, the concrete testing.
The city is its own category.
We have a house right now that was fully permitted, built to those permits, and then the city came back after it was finished and asked us to change something.
Tear it out, or appeal it.
We’re appealing.
Either way, it delays the job, and delays cost us in general conditions.
How Vought Holds The Number On A Difficult Hillside Site
On a hillside site, we hold the number by pricing the excavation before the contract instead of during it, and by holding our subs to the bids they gave us.
The geotechnical engineer runs boring samples to see how competent the soil is, the structural engineer designs off that report, and then we work out what it actually takes to dig it.
Access decides the price.
If we can get a sixty to seventy thousand pound machine up there with a fifty-foot reach, we move dirt fast.
If we can’t, a crew lays planks in front of it and walks it up the hill, and that can eat an entire day.
The machine runs about three hundred dollars an hour either way.
The truck delivering it is sixty feet from the nose of the semi to the end of the trailer, and these Berkeley Hills streets were laid out in the 1900s.
Off-hauling is the same math.
Ten or twelve dump trucks, fifty loads a day, which only works if we’ve already found places to stage down the hill.
All of that gets priced before you sign.
Then there are the subs.
Your subcontractor wrote his estimate at night after finishing work, and it may or may not include everything.
Once he’s into the job, the gaps show up as “I didn’t include that.”
Jorge holds him to his contract.
We also carry a float in the number, which is part of why we can hold it.
Under-bidding is what breaks these jobs.
We know of two hillside projects near us, one started in 2018 and one in 2019, both still sitting and both in dispute.
We’re consulting on one of them.
Twelve to fourteen months of work, unfinished for years, because the builder bid low, cut corners, and ran out of money to finish.
Fixed, Not Flexible: Why the Number Holds at Vought Construction
If you take one thing from this, take the order of operations: the selections, the bids, and the schedule all get settled before a price gets quoted, which is why the price can hold. The exceptions are named out loud before you sign, not discovered halfway through framing.
If you’re weighing your options for builders for a hillside project, fill out our contact form or give us a call today. We’d rather answer your questions now than after somebody else’s number moves.
