Builder Jay Grant contracts with his custom-home clients using an "open-book" construction management fee arrangement. He collects 20% of the cost of labor and materials rather than agreeing with the client on a set fee in advance.
"I really believe that this is the best way to serve my clients," he says. "I tell them upfront my percentage and how the choices that they make will affect the cost of the house. This really brings the client into the decision-making process."
Grant begins the process by using preliminary drawings for the project and an extensive worksheet that details all the costs involved and serves as a road map for his clients. "I tell my clients, ‘Here’s the bottom line: I’m charging 20% no matter what. If you keep your costs lower, then my commission is lower, and that’s OK.’ This gives the client a lot of flexibility - and they like that."
Grant says he even welcomes his clients’ involvement in the bidding process. "I’ve had cases in which the clients met with representatives of three or four manufacturers themselves, and then they can make the decision on what features are important to them and how much they ultimately want to spend."
Once they get into the routine, he says, most clients are up to the extra work. "You do have to have a client, however, that is willing to be highly involved in the construction process," Grant says. "But this is the kind of client that I want anyway."
If there is a downside to this arrangement, Grant says, it is that it can be more of a challenge for the builder to build a house this way. "I’m dictated by my own ethical standards to give clients updates on costs and work hard to get them the lowest bids possible," he says. "But this is really a win-win situation for everyone. I’m providing a service for the client but not doing all the bidding work myself."
Architect Robert Scialla agrees that this is a sound approach. "I have directed my private clients to Grant because I really like his construction management fee arrangement rather than the antiquated approach where the general contractor charges a lump-sum fee," he says. "It’s a very up-to-date way to build a house."
Related Stories
Custom Builder
Floodproof on a Floodplain
An impressive addition to the IDEA Home series, the NEWLOOK Experience Home is a master class in engineering and creative design, with builder Michael Freiburger out-thinking an exceptionally tricky lot
Custom Builder
3 Questions Answered About Reliable Energy in Home Construction
Energy expert Bryan Cordill makes a case for why and how propane is an answer to growing concerns about reliability and resilience in home construction
Business
Custom Builder to Talk Color Design with Becki Owens at IBS
At this year's IBS, renowned designer Becki Owens will sit down with host James McClister, editor of Custom Builder, to discuss a variety of topics from basic color play in design to the Allura Spectrum palette, a collection of Sherwin-Williams colors curated for the benefit of pros
Business
PERC Highlights Sustainability and Efficiency at IBS with 'Clean Build Conversations'
Hear from industry standouts Matt Blashaw and Anthony Carrino at this hour-long Show Village event
Custom Builder
Telling a Story That Preserves the Past
Custom builder and historic restoration and preservation expert Brent Hull walks us through the careful details of his Pennsylvania Farmhouse project
Business
Defining Outdoor Living in 2024
Residential experts weigh in on outdoor living trends in new report
Construction
How to Air Seal the Garage
A poorly sealed wall or ceiling between the garage and the main house can let harmful fumes into the living space
Business
Taking Advantage of Incentives Through Weatherization
Industry insider Kristen Lewis walks us through the basics and benefits of weatherization
Custom Builder
2023: A Year of Case Studies
A look back at the custom homes and craftsman details we spotlighted last year
Customer Service
A Smart Home Built Smart
Custom builder August Homes blends efficient, hi-tech home automation systems with high-performance, sustainable building strategies