What To Expect: Cost-Plus Fixed Fee Contract

Introduction to Construction Contracts

When you build a custom home, choosing the right type of construction contract can make a big difference. At Kimball Construction, we want you to feel confident, informed, and in control throughout the building process. One of the most popular and homeowner-friendly options we offer is the Cost-Plus Fixed Fee Contract.

This contract structure provides clarity and flexibility, helping you understand where your money is going while allowing adjustments along the way. Whether you’re building your dream home from scratch or selecting a lot to get started, knowing what to expect from this agreement is essential.

What is a Cost-Plus Fixed Fee Contract?

A Cost-Plus Fixed Fee Contract is an agreement between you and Kimball Construction where you pay for the actual cost of building your home—like materials, labor, and permits—plus a set fee that covers the builder’s overhead and profit.

Key Components of a Cost-Plus Fixed Fee Contract

• Actual Costs: Includes all job-related expenses.
• Fixed Fee: A predetermined amount paid to the contractor.
• Open Book Accounting: You’ll see where every dollar goes.
• Adjustability: Design and material changes are easier to accommodate.

This structure is often favored because it ensures full transparency and open communication between you and your builder. You’ll never be in the dark about costs.

Benefits of Transparency and Flexibility

• You know how funds are allocated.
• You can make informed choices about upgrades.
• There’s less risk of surprise charges.
• You benefit from a strong partnership with your builder.

When Should You Choose a Cost-Plus Fixed Fee Contract?

Choosing this type of contract makes sense in several scenarios—especially with custom new home builds. Here’s when it shines:

• If plans are not finalized: You need the freedom to make changes as you go.
• If material or labor costs are fluctuating: Avoid inflated estimates in fixed-price bids.
• If you want to handpick finishes and appliances: This contract allows flexibility in selections and budget adjustments.

Kimball Construction guides homeowners through each stage, making this contract a reliable option when personalization and flexibility matter most.

How is a Cost-Plus Fixed Fee Contract Different From a Fixed Bid Contract?

While both contracts get your home built, they operate very differently.

Cost Plus Fixed Fee vs. Fixed Bid Contracts

How is a Cost Plus Fixed Fee Contract Different from a Cost Plus Percentage (Time and Material) Contract?

While both contracts fall under the “cost plus” category, their structure and incentives are significantly different.

Cost Plus Fixed Fee vs. Cost Plus Percentage Contracts

At Kimball Construction, we exclusively use the Cost Plus Fixed Fee Contract—and here’s why: Unlike some other builders who use cost plus percentage contracts, we believe this model misaligns incentives. If a builder earns more as the total project cost increases, there’s less motivation to find savings or manage budgets tightly.

With a Cost Plus Fixed Fee Contract, our only incentive is to deliver the highest-quality home while staying within budget. Our reputation depends on transparency, trust, and doing what’s right for our clients—not maximizing profits at your expense.

This approach reinforces our commitment to treating every home as if it were our own.

Who Prepares the Cost-Plus Fixed Fee Contract?

At Kimball Construction, we handle the contract drafting process in-house. We prepare a detailed and easy-to-understand document outlining:

• All project costs and terms
• Your role and decision-making power
• Our responsibilities and fixed fee
• Milestone payment schedules

We walk you through every section so nothing gets overlooked.

Advantages of Using a Cost Plus Fixed Fee Contract with Kimball Construction

Choosing this type of agreement has real benefits:

• Real-time cost updates
• Transparent invoicing
• Fewer delays due to change orders
• More input in decisions
• Detailed project tracking in Buildertrend

You’ll feel like a partner, not just a client.

Cost Management and Payment Schedules

Your payment schedule will typically be tied to construction milestones. Kimball Construction provides updates through Buildertrend, so you’ll know when a payment is due and exactly what it covers.

We also perform frequent budget reviews, ensuring no surprises at the end of the project.

Risk Factors and How to Mitigate Them

Although this contract offers many perks, it’s important to keep an eye on spending.

Risks

• Costs can increase due to design changes or material upgrades.
• Poor documentation from less experienced builders can lead to confusion.

How Kimball Construction Mitigates Risks

• Itemized invoices
• Clear communication via Buildertrend
• Transparent approvals and decision-making

Communication Tools Used by Kimball Construction

Buildertrend is at the heart of everything we do:

• Daily logs and photos
• Budget tracking
• Document storage
• Messaging and approvals

This tool keeps everything organized, transparent, and stress-free.

Frequently Asked Questions

1. Can I make changes to finishes after construction begins?
Yes! That’s one of the key advantages of this contract.

2. Will I get receipts and cost documentation?
Absolutely. Kimball Construction provides detailed documentation for every cost.

3. What happens if costs go over the initial estimate?
There is a possibility that costs may exceed the initial estimate, especially if changes are made to materials, finishes, or the scope of work during construction. Kimball Construction communicates all changes immediately and provides updated cost information through Buildertrend. You’ll only be billed for items you approve; however, it’s important for homeowners to actively monitor the budget and review all updates to help keep the project on track financially.

4. How do I access Buildertrend?
We’ll set up your account and show you how to use it on day one.

5. Are there any upfront costs?
You’ll typically pay a fee upfront, then follow a milestone payment schedule.

6. Is this contract type more expensive overall?
Not necessarily—it offers better control, which often leads to cost savings.

Conclusion

A Cost Plus Fixed Fee Contract offers unmatched flexibility, transparency, and collaboration when building a new home. At Kimball Construction, we pride ourselves on making the process smooth and clear—putting you in control from the first blueprint to the final walkthrough.

If you’re considering building a new home, let’s talk about whether this contract is the right fit for your vision. Learn more about our process or contact us to get started today.