International Consultation : +6282219788877

Digest Everything There is to Know About Lump-sum & Cost-and-fee for Housing Development

Digest Everything There is to Know About Lump-sum & Cost-and-fee for Housing Development
Published 18 February 2022    Education, Tips and Trick
Written by: Adam Fonsecha S.S.  

Have you decided on the right supervisor and conductor/contractor to help you build the dream house? If so, before the final partnership contract is signed, try and digest everything there is to know and the differences between The lump-sum & Cost-and-fee systems. You may have heard about these two methods, but do you know the definition? No worries, Emporio Architect will share another useful information that elaborates The lump-sum & Cost-and-fee systems, from the meaning, the plus and minus points of the two for house development. Do you have your coffee?

What is lump-sum?

lump sum

In literal, the lump-sum is a payment method submitted to a contractor service in a large amount of money upfront in accordance with the budget plan summary and proposal proposed during the tender. Once the payment is settled, it automatically indicates that the management of funds, the hiring of builders, work schedule, material purchasing, and others are fully managed by the contractor. You, as the future homeowner, will only receive the end product and have no say during the process.

Financial-wise, the lump-sum system generally costs more because the fees are set based on 3 components, which are real cost fees, overhead cost, and contractor’s profit. Real cost fees are the expenses fees from the contractor during the development. The contractor’s profit is simply a profit that the contractor earns based on the purchasing service. Overhead cost is unplanned expenses.

It needs to be noticed that contractors with the lump-sum system will not set the costs too close to the real cost to prevent unwanted risks. Therefore, contractors usually set 5-10% overhead fees from the real cost that will be used to pay additional job tasks or unplanned expenses. If there are no additional job tasks and unplanned expenses, the overhead cost goes into the contractors’ pockets.

lump sum

Not only that, another drawback of a the lump-sum system is the misappropriation of funds that affects the building quality. The development result is prone to be a disappointment and untidy because the builders often work half-heartedly and are rushing for a quicker finish so the wages can be disbursed. In a simpler sentence, the faster the builders finish, the quicker they’ll get paid.

Contractors with the lump-sum system indeed work faster, but the quality is always questionable. You can choose to use it if you’re looking for practical reasons and faster development without spending more money than what you’ve already paid for.

What is cost-and-fee?

cost and fee

A Cost-and-fee system is a contract payment system of a contractor service by paying a certain percentage from the total payment (generally 10% or more, based on the agreement you’ve made with the contractor), including material purchasing, workers service, and more.

Differ from the lump-sum system, the cost-and-fee system offers a more flexible option. Fund management by the contractor is fully transparent, where every week, you’ll be receiving a work progress report, worker’s presence list, work target, and material purchasing allocation with the receipts and the installation fee in real cost. Therefore, you can monitor the material type and quality purchased with the amount, fee, and every worker’s wage per work.

Moreover, you, as the owner, can also make your own purchase of material and manage your own expenses. Therefore, you can select the material type and quality that you desire. The cost-and-fee system is preferable if you choose quality above anything else and have time to fully manage the development of your house.

cost and fee

On a side note, the cost-and-fee system relieves contractors from all responsibilities of the increment of material price due to inflation or work schedule lateness due to weather reasons. On another side note, the cost-and-fee system offers a lot of advantages, including time flexibility, controllable work results and quality, cost efficiency, a working system, and fund management that fully circles on honesty and transparency.

Those are the main aspects that prove the cost-and-fee system to be more superior in comparison with the lump-sum system. If you want to release your creative and experimenting soul, the design of your house can now have more freedom with no boundaries. Furthermore, the total cost will be cheaper compared to the lump-sum system. The reason is the expenses will always be real costs using the cost-and-fee system compared to the lump-sum system that includes real cost, overhead cost, and contractor’s profit.

cost and fee

Here is how the lump-sum system differs in comparison with the cost-and-fee system.

cost and fee

cost and fee

cost and fee

Those are the definitions and differences between lumps sump and cost-and-fee system. Now that you’ve digested the comparisons, ups, and downs of both, you can now safely select the supervisor and contractor you want to work with using one of these contract systems. Therefore, the housing development can be started immediately.

Are you still looking to create the design of your future house? Easy peasy lemon squeezy, all you have to do is hire Emporio Architect. Emporio Architect also provides the solution if you can’t decide which supervisor service to hire. What are you waiting for? Grab a phone and say hello to Emporio Architect’s customer service, and book right away!

Fairus Rizki Nurrahmawati, S.Ars
AUTHOR
Adam Fonsecha S.S.  
Born and raised in Bali, Indonesia, does not limit his passion for learning other languages and desire to reach multiple continents through his writing. Writing articles has been his journey since graduating as it connects him with many people locally and globally. Also, nothing beats the feeling of readers taking an interest in a product that has been literately created into a future promise.

If you have any questions, please consult with us.

ALSO READ:
Image Tips of Choosing House Land
Tips of Choosing House Land
 Education, Tips and Trick 
18 December 2021
Image Tips On How To Make Land Purchase
Tips On How To Make Land Purchase
 Education, Tips and Trick 
20 December 2021
Image How to Provide a Topography Data and Size of Land to plan a House Design
How to Provide a Topography Data and Size of Land to plan a House Design
 Education, Tips and Trick 
20 December 2021
Image Understand the Importance of Conducting a Soil Test to Decide the Structure Type and Size
Understand the Importance of Conducting a Soil Test to Decide the Structure Type and Size
 Education, Tips and Trick 
21 December 2021
Image Dont Miscalculate the Timing. This is the Best Time to Plan and Build a House that You Need to Know!
Dont Miscalculate the Timing. This is the Best Time to Plan and Build a House that You Need to Know!
 Education, Tips and Trick 
07 January 2022
Image Ways to Prepare Space Necessity Data to Design a House
Ways to Prepare Space Necessity Data to Design a House
 Education, Tips and Trick 
10 January 2022
Image A Few Facts About the Definitions, Types, and the Techniques of Choosing a Building Style that You Need to Know!
A Few Facts About the Definitions, Types, and the Techniques of Choosing a Building Style that You Need to Know!
 Education, Tips and Trick 
15 January 2022
Image The Development Budget Overview You Need to Know!
The Development Budget Overview You Need to Know!
 Education, Tips and Trick 
17 January 2022
Image The Procedures of Conducting Discussions, Revisions, Direct Meetings, and Virtual Meetings with the Architect
The Procedures of Conducting Discussions, Revisions, Direct Meetings, and Virtual Meetings with the Architect
 Education, Tips and Trick 
20 January 2022
Image Step-by-Step Process of House Designing
Step-by-Step Process of House Designing
 Education, Tips and Trick 
20 January 2022
Image Learn 10 Principles of Emporio Architect to Magically Turn a House Into A Villa
Learn 10 Principles of Emporio Architect to Magically Turn a House Into A Villa
 Education, Tips and Trick 
21 January 2022
Image 75 Architecture Terms that are Commonly Mentioned in House Design
75 Architecture Terms that are Commonly Mentioned in House Design
 Education, Tips and Trick 
03 February 2022
Image Learn These Technical Drawing Plans and Functions for House Design Planning
Learn These Technical Drawing Plans and Functions for House Design Planning
 Education, Tips and Trick 
05 February 2022
Image These are Ways to Prepare Land Maturation for Houses
These are Ways to Prepare Land Maturation for Houses
 Education, Tips and Trick 
05 February 2022
Image Comprehend the Definition of Tender and the Functions of Design Drawing Tender Preparation
Comprehend the Definition of Tender and the Functions of Design Drawing Tender Preparation
 Education, Tips and Trick 
07 February 2022
Image Tips on How to Require Building Permits Using a Third-Party Service
Tips on How to Require Building Permits Using a Third-Party Service
 Education, Tips and Trick 
12 February 2022
Image Digest Everything There is to Know About Lump-sum & Cost-and-fee for Housing Development
Digest Everything There is to Know About Lump-sum & Cost-and-fee for Housing Development
 Education, Tips and Trick 
18 February 2022
Image Learn These Different Measurement Methods Used by Architects, Quantity Surveyors, Contractors, Interior Designers and Their Influenced During the Development
Learn These Different Measurement Methods Used by Architects, Quantity Surveyors, Contractors, Interior Designers and Their Influenced During the Development
 Education, Tips and Trick 
01 March 2022
Image Learn About These Common Problems in House Construction Progress and How to Solve Them!
Learn About These Common Problems in House Construction Progress and How to Solve Them!
 Education, Tips and Trick 
15 March 2022
Image These are 5 Tips of Developing a Growing House and a Few Consequences that You Need to Know!
These are 5 Tips of Developing a Growing House and a Few Consequences that You Need to Know!
 Education, Tips and Trick 
15 March 2022
Image Tips and Alternatives for Material Substitutions to Lower the Budget
Tips and Alternatives for Material Substitutions to Lower the Budget
 Education, Tips and Trick 
21 March 2022
Image Tips to Treat Outdoor Natural Stone
Tips to Treat Outdoor Natural Stone
 Education, Tips and Trick 
25 March 2022
Image Tips to Treat Marble Walls and Floors
Tips to Treat Marble Walls and Floors
 Education, Tips and Trick 
31 March 2022
Image Tips to Treat Wooden Walls and Floors
Tips to Treat Wooden Walls and Floors
 Education, Tips and Trick 
31 March 2022
Image Tips to Avoid Termites
Tips to Avoid Termites
 Education, Tips and Trick 
01 April 2022
Image Tips to Prevent Ceiling Leaks
Tips to Prevent Ceiling Leaks
 Education, Tips and Trick 
04 April 2022
Image Tips to Keep Rainwater from Coming Through the Door Gap
Tips to Keep Rainwater from Coming Through the Door Gap
 Education, Tips and Trick 
06 April 2022
Image Tips to Prevent Walls from Mold
Tips to Prevent Walls from Mold
 Education, Tips and Trick 
08 April 2022
Image Tips to Decrease the Building Temperature
Tips to Decrease the Building Temperature
 Education, Tips and Trick 
12 April 2022
INTERIOR DESIGN:
         
Last Viewed:
CONSULTATION WITH OUR CS
Syahrul Dwi Andrian, Amd
Andrian
Dwi Pratiwi, S.Ars
Tiwi
I Gusti Agung Ayu Chandra Devi, S.Ars
Devi
Aarles Sumarten, S.S.
Arles

Telp. International:
+6282219788877

Whatsapp QR Code:
Jakarta Office

DBS Bank Tower Lantai 28, Ciputra World, Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940

Architect Office in Jakarta

Google Map Emporio Architect Jakarta

Bali Office

PERUM Piakan Indah Mesari No. 18A, Jalan Piakan I, Batubulan, Kec. Sukawati, Kabupaten Gianyar, Bali 80582

Architect Office in Bali

Google Map Emporio Architect Bali

Bandung Office

Menara Asia Afrika Lantai 9 Regus Office No. 918, Jalan Asia Afrika No. 133-137, Bandung 40112

Architect Office in Bandung

Google Map Emporio Architect Bandung

Surabaya Office

Pakuwon Center Lantai 23, Jl. Embong Malang 1-5, Surabaya, Jawa Timur 60261

Architect Office in Surabaya

Google Map Emporio Architect Surabaya

Yogyakarta Office

Jl. Sagan Kidul No.14, Terban, Kec. Gondokusuman, Kota Yogyakarta, Daerah Istimewa Yogyakarta 55223

Architect Office in Yogyakarta

Google Map Emporio Architect Jogja

Semarang Office

Gedung Menara Suara Merdeka Lt. 11, Jalan Pandanaran No. 30, Pekunden, Semarang Tengah, Semarang, Jawa Tengah 50241

Architect Office in Semarang

Google Map Emporio Architect Semarang

Balikpapan Office

Panin Tower Floor 8th, Jl. Jendral Sudirman No.7, Balikpapan, Kalimantan Timur 76113

Architect Office in Balikpapan

Google Map Emporio Architect Balikpapan

Contact Us
International Consultation : +6282219788877

Consultation : infoCHARACTER SEQUENCE@emporioarchitect.com

Offers & Partnership: partnershipCHARACTER SEQUENCE@emporioarchitect.com

Follow Us