Cohousing-L Mailing List: Construction contracts/costs/builder's profits

[RAYGASSER (01HT909LD0OW9ULZ3R]

I need some info about construction contracts/costs etc for the
contract committee at EcoVillage.

We're working out some of the details on our contruction contract with our
design/builder, which need to be handled pretty quickly, and have come to
something of a stumbling block. We think that the mark-ups they're
using are a bit excessive, but it's hard to tell, since we don't really
know what they're based on. Example (and the specific wording may not
be exact; I'm doing this from memory, which is decidedly weak, rather than
the actual contract proposal):
  
  Infrastructure & housing: material costs + 28%
  Labor costs: Cost + 52% overhead

I realize that the overhead does have some real cost involved, but we're not
sure exactly what they're considering in the "cost" part, and what is being
included in the "overhead". The bottom line is: they don't really want to
reveal their profit margin, and we don't want to 1) have them cutting costs
to increase their profit, 2) agree to a contract where the prices can 
fluctuate wildly and possibly at their whim, and 3) pay a lot for for our
muffler (oops, houses).

The contract committee will be trying to work out these details and to 
get more disclosure this week, but as we need to move quickly, I thought
I'd ask those of you who've been thru it how you went about calculating
the contruction costs/builder's profits and keeping the house costs down.

Factors that also need consideration: We're going to end up signing the 
contract with this builder. Differences may or may not get worked out to
everyone's satisfaction, but it's gonna take way longer than we're willing
to wait to get competitive bids at this point.

We've been working with them for a couple of years now on the design phase,
and have been very happy with their performance, and have not felt in the
least ripped off. We've gotten lots of free "extra" work, they work well 
with the "process" and they support co-housing.

While they have little real incentive to bargain AT ALL on this project,
they realize that EcoVillage is planning up to 4 more neighborhoods on this
property, and they will either have a BIG advantage with the future groups
if this first one turns out well and everyone's happy, or, if we're
pissed off, future neighborhoods will certainly know it and they won't have
a snowball's chance of getting that business.

This is about a $3.2 million project, with all the houses pre-sold (or at
least we're about at 30 households now, and they won't be building any
on spec). So 10% to 15% is a hefty chunk of change ($300-450k), but I
wouldn't begrudge them a decent margin, and that doesn't seem too bad.
20%+ seems a bit excessive in terms of actual dollars.

Have any of you worked on a "flat fee" basis, like "documented costs
plus $300,000" or the like?

Ray Gasser, First Residents Group (FRoG), EcoVillage at Ithaca
raygasser [at] delphi.com