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Armed with all the product detail information provided through the meetings, and the drawings
90% complete, the GC will build the bid documents realizing a detailed schedule of values. The
schedule of values is compiled using various estimating techniques, which include visualization of
the building of your approved drawings, unit pricing and soliciting trade bids. After the schedule of
values has been established supporting the budget, the owner can finalize their construction
lending. The GC then provides the Design Team with the itemized detail budget and the allowance
schedules supported by the plans, specifications and product selections provided by the
homeowner. The allowance schedule is for decorator items like lighting and plumbing fixtures,
flooring, appliances, hardware, etc. which have not been clearly defined. This budget usually
represents the +/-5% of the actual and total construction cost. At this point, the owner may choice
to finalize the construction contracts and have the GC submit the plans for the building permit, if
not previously submitted.

Contract Structures and Insurances

There are a number of contract document structures that the homeowner can use, with each
required professional member individually, or the owner can contract with the collective Design
Team in a single document. We will only list these contracting method options, for contract
opinions are outside the scope of this guide, as well as a discussion of the legal effects of the
different contract justifications. *Nothing in this guide should be considered as offering legal
advice. Architects, General Contractors and Interior Decorators usually all provide the homeowner
with their own professional association's standard contracts if contracted separately.

AIA Owner Architect Design Agreements are used when the Owner and the Architect enter into a
design agreement to design a single family residence.

Fixed Price Lump Sum Contracts are used between the General Contractor and the Owner that
provides a specific fixed price for a specific scope of work. The advantage to the owner is that they
have a fixed contract amount, based on the working construction documents. This is conditional
however, providing that no material changes are made during construction, unless it is at the fault
of the General Contractor. This type of contract tends to experience more Change Orders.

Cost Plus Fee Contracts Although this type of contract shifts most of the actual building cost risk to
the owner, there are times when this contract can also be beneficial. Such a time is when the
housing project scope of work is not clearly defined, or the construction is so unique that no
reputable General Contractor will provide a reasonable Lump Sum Bid amount. This contract is
also used to fast track a design build project where time is a major concern. The major owner
advantage of this type of agreement is that you are provided full transparency of the project cost.
Each invoice must be presented to the owner for payment.      


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