What is a negotiated contract?
The job is not put out for competitive bids. Instead the owners hire the builder based on the quality of his reputation, the level of service he provides, and the degree of trust they have in him. Whether the job is built fixed price or cost-plus, the builders fee is negotiated between the builder and the clients. This approach frees the builder to base his estimate on the costs, not on the competitors numbers. Many negotiated jobs are “open-book”, which means the builder ensures the clients trust by letting them see exactly what each item needed to build their project costs. In a negotiated contract, the builder, owner and architect work together as a team. Construction costs are established early in design, with the builder providing knowledge of construction techniques and material costs.
