Fixed price vs. time & materials: how Hudson builds with clarity

Start with a realistic overall budget

Early in a project, you need to know whether the home you have in mind fits the investment you are prepared to make. That conversation covers the house, site development and other work that belongs in the full budget. It gives design a practical starting point.

An early planning range is based on what is known at the time. As the site, layout, materials and scope become clearer, the team can develop a more specific cost picture. Treating the first range as a final construction commitment skips the work needed to define what will actually be built.

What phased fixed pricing means at Hudson

At Hudson, phased fixed pricing means a fixed price construction contract with payments organized around phases of work. The Construction Agreement establishes the contracted base scope, price, allowances, exclusions and payment schedule before production begins.

Phase deposits fund the agreed work before the relevant phase starts. Buildertrend records the phase balances and invoicing under the agreement. These payment stages do not mean the base contract is being repriced from day to day as labor and materials are used.

Design & Development is separate and billed for time and agreed expenses. It develops the information needed for the construction decision. Once construction is contracted, approved changes and agreement provisions govern any adjustment to that commitment.

Why we favor fixed pricing over time and materials

With time and materials, billing follows the labor performed and materials used, under the rates, markups and any limits in the agreement. It can be useful while the work is being defined. Hudson uses a time based model for Design & Development, then a separate fixed price agreement for construction.

For the defined construction scope, fixed pricing gives you a commitment to evaluate before authorizing production. You can weigh the design and selections against your priorities without treating every labor hour or material purchase as a new pricing decision. That is valuable when you want to stay involved in the home without managing daily construction costs.

The planning work comes first. The agreement still needs to show allowances, exclusions, payment phases and the process for changes. Fixed pricing gives clarity about the agreed work; additional scope needs its own decision.

Why design and selections come first

A price is only as useful as the work it describes. Plans, materials, finish choices, site information and trade input help establish that description. When those details are unresolved, it is harder for an owner to know whether two proposals cover the same result.

At Hudson, Design & Development brings these decisions together before the construction commitment. The goal is to reduce the number of important choices left unanswered when work starts. This stage is part of managing the project’s cost and scope.

For example, agreeing on the intended windows and their specifications gives the team a clearer basis for pricing than a general reference to premium windows. That is an illustrative example, not a project quotation.

Read the scope alongside the price

Review the construction proposal for the work included, the selections used for pricing, anything excluded and any allowances. Identify costs that sit elsewhere in the overall investment, such as land, Design & Development, furnishings or other owner responsibilities.

Read the phase payment schedule alongside that scope. Confirm what must be funded before each phase, how invoices apply to the deposit, and how change orders are billed separately.

Clear written terms help the homeowner and builder work from the same expectations. The Federal Trade Commission’s contractor guidance recommends documenting scope, costs, materials, payment timing and changes. Take time to understand the commitment before work begins.

How changes fit into a fixed price approach

A fixed price applies to the agreed work under the contract’s terms. Adding work or changing selections can change that commitment. Any allowances, exclusions or provisions addressing unforeseen conditions also need to be understood in the actual agreement.

Hudson documents the scope, pricing and approval of changes before the changed work proceeds. A change may also affect purchasing or the schedule, so the decision should include those implications.

The benefit is a clear decision: understand the proposed change and its effect before approving it. A fixed price approach should give you confidence about the commitment you are making without implying that every possible future change is already included.

Working with banks and construction lenders

Hudson works with banks and construction lenders on financed projects. A defined construction scope, fixed price and documented payment schedule give the lender a basis for reviewing the plan. We coordinate contracts, budgets, schedules, invoices and insurance documentation.

A bank may release construction funds as work progresses, while Hudson’s agreement requires phase deposits before the relevant work begins. These schedules must be coordinated early. Confirm how each deposit will be funded, what the lender needs for inspections and draws, and whether owner funds are needed between disbursements.

Your bank determines loan eligibility, reserves and disbursement requirements. We help align the building plan with those requirements; a fixed-price agreement does not itself guarantee financing. See our financing FAQ for the next step.

What to ask in your first pricing conversation

Ask what information is needed to move from your early planning range to a fixed construction proposal. Review the decisions you need to make, what the proposed scope includes, allowances, exclusions and the total investment.

Then review the phase funding schedule and change process. You should understand both the work you are committing to and the decisions or costs that sit outside that commitment.