StreamHome Construction Podcast

From Fixed Price to Finished Project: How Stream Home Construction Keeps Your Budget Intact

• Alex Kosley • Episode 5

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How Do You Ensure A Project Stays On Budget?

Ever wondered why construction projects so frequently go over budget? Alex Kosley pulls back the curtain on budget control secrets that have made StreamHome Construction one of the most trusted general contractors in Colorado Springs.

The conversation dives deep into the power of fixed price contracts—a cornerstone of Stream's approach to residential and ADU projects. Unlike contractors who rely on change orders to pad their profits, Stream operates on a model where the price only changes if the scope itself changes. This seemingly simple distinction has profound implications for homeowners who want financial predictability without sacrificing quality.

Whether you're planning an ADU in your backyard or renovating a commercial space, these insights could save you thousands in unexpected costs. Ready to experience a different kind of construction process? Visit online or call for a free on-site consultation and discover why so many Colorado Springs residents trust Stream with their most important projects.

To learn more about StreamHome Construction visit:
https://www.YourStreamHome.com
StreamHome Construction
719-644-6777

Speaker 1:

Welcome to the Stream Home Construction Podcast, where we take your project from conception to completion. Hosted by Licensed General Contractor Alex Kozley, we cover everything from accessory dwelling units to commercial construction in the greater Colorado Springs area. Whether you're dreaming of a new ADU, planning an office upgrade or tackling a major renovation project, we've got the expertise to guide you through it. Let's get building.

Speaker 2:

Welcome back everyone. Tony Hills, co-host, slash producer, back in studio with Alex Cosley. Alex, how's it going?

Speaker 3:

I'm doing great today, tony, how are?

Speaker 2:

you doing. That's great to hear. Great to hear. Alex, everyone wants to know how do you ensure a project stays on budget? Is there a secret construction fairy we don't know about?

Speaker 3:

Well, there's no construction fairy that we've found yet. But there is a system. We built that system from the ground up to serve homeowners and business owners across the Front Range. First, the foundation really is fixed price contracts. For most of our residential and ADU projects in Colorado Springs we operate on a fixed price model. That means if it's in our scope of work, we're doing it and the price won't change. The only time the cost adjusts is if the scope itself changes. Using fixed price contracts protects homeowners from the common nightmare of constant change orders.

Speaker 3:

We create hyper detailed scope of work documents before the project starts to ensure there are no surprises. Every cabinet, fixture, paint colors accounted for before we break ground. If we ever miss an item, we're sure to add it to our project template so it won't be missed again in the future. Also, with the fixed price contract, if we ever miss an item, we're sure to add it to our project template so it won't be missed again in the future. But also with the fixed price contract, if a project took us, say, a month longer to complete versus what we projected, we don't charge extra to our clients. This increases the incentive for us to better control costs and budget internally, whereas contractors that just pass these overages onto their clients have minimal incentive to correct these types of issues. We also use proprietary project management tools that actively track both budget and schedule in real time.

Speaker 3:

Here's something a lot of people miss when schedules slip, costs rise Really. Schedule slippage is probably the primary contributor to schedule and budget overruns in the construction industry. Delays create ripple effects that can seriously impact your bottom line, whether we're building a backyard ADU or remodeling a commercial office space time but again, in a fixed price contract, our clients do not have these costs rolled back up to them. And what's the biggest culprit behind cost overruns? Well, aside from scheduled slippage, once a project's running, the biggest contributors are poor planning and mid-project indecision, which is why we work closely with clients to finalize all major decisions before construction starts, because waiting until you're in orbit to figure out the flight plan just doesn't work.

Speaker 3:

I recently heard a Construction Systems podcast host describe an encounter he had with a NASA engineer who's been working on the same project for 10 years. The biggest thing that this guy gleaned from the conversation is that contractors can take a note from NASA engineers and essentially do everything we can to ensure there's a solid plane in place prior to takeoff. Construction is not as complicated as rocket science, but the same principles apply.

Speaker 3:

Having a solid plane in place prior to launch greatly increases the chance of success. All of the parts and components of a project intertwine, just like within a rocket, so not knowing what all the parts and pieces are and where they go before taking off is a recipe for disaster that can lead to people getting hurt and something we don't want to subject our clients to. But if we had a secret weapon or maybe you might call it a construction fairy that's this for our team. We care deeply. If we miss something that should have been in our scope, we most often take responsibility for it rather than passing that on to the client with a surprise change order. That's not magic, that's integrity, and it's what makes us one of the most trusted GCs in Colorado Springs.

Speaker 3:

So again no fairy dust, just experience systems and a team that's committed to delivering top-notch ADU and remodeling.

Speaker 2:

What do you do when you notice a potential issue that could impact the budget?

Speaker 3:

So as soon as we identify a potential issue, you know, first step is to let the client know. Now, typically we want to get a little more information before we go to the client to better understand what are the implications, what are the repercussions If it's something that we've missed, something that comes up that could potentially delay the project. Well, let's say, the client is delayed in making their selections and that's going to cause a delay to the project. Our intent is to let the client know as early on as possible what the implications of that delayed decision can be, from there and then give them some choices. Either we keep working and likely incur some delay and some inefficiencies that will increase the price, or we can stop work until these conditions are met so that we can proceed and minimizing any additional expenses in the event that something like that comes up.

Speaker 2:

Okay, how do you ensure the initial estimate is as accurate as possible when you first start the project?

Speaker 3:

That's a great question.

Speaker 3:

The biggest way that we do that is by using template estimates that really encapsulate pretty much every potential expense that could come on a project, so that we have 150 line items, and a lot of times we're just deleting those line items because they may only show up on one out of every 10 projects.

Speaker 3:

Much rather have extra things in our estimate that need to be deleted than to have things that aren't in there that need to be added, because it's a lot easier to see something that doesn't belong than to see something that does belong and that isn't there. So we found that just one way that we can really make sure our estimates are complete is relying on previous estimates and, as I mentioned in response to the first question, anytime we miss something, you know, if we realize, hey, this is something that's missed, it's going to be at least on 10% of our projects we're going to add that into the template. That way it's not overlooked in the future. That's probably really the biggest way that we address that. But we also have multiple levels of reviews of our estimates, internally as well as with clients in most cases. So there's just high levels of review. We've got several systematic checklists and systems in place to really ensure that that process is tight and lots of different double checks is kind of part of our secret sauce.

Speaker 2:

Okay, well, alex, as always, that's some informative and helpful information you gave us today. We'll catch you in the next episode. Have a fantastic rest of your day.

Speaker 1:

Thanks, tony, we'll see you next time. That's a wrap for this episode of the Stream Home Construction Podcast. Ready to bring your vision to life, snag a free on-site consultation by visiting our website at wwwyourstreamhomecom, or call or text us at 719-644-6777. Until next time, let's keep building your residential and commercial dream in the greater Colorado Springs area.