Why would I sign a design-permit contract and not a design-permit-build contract?
I get this question a lot. Why can’t a contractor give me an “all-in” price for a full home remodel or a remodel plus addition?
The short answer: they can—but the numbers will be somewhat arbitrary. For large-scale projects (or any project involving structural changes like removing or tying into load-bearing walls), the first step should be the design process. Design decisions impact engineering requirements, and engineering, in turn, drives your build costs.
So, when you receive an “all-in” quote for a complex project, one of two things usually happens:
Cost padding – Since the contractor doesn't yet know the final design, they need to build in a financial cushion to cover unknowns. If you’re asking for a fixed bid at this stage, you’ll likely pay more than if you pursued a design-permit process first.
Change orders – Once the scope changes from the original discussion, so does the price. While change orders are common, they should generally come from the homeowner—such as material upgrades or scope modifications. Unforeseen site conditions (e.g., an abandoned septic tank, a boulder… or… dinosaur bones) are exceptions. When expectations aren't clearly set from the beginning, change orders become frustrating. The reality is: for a complex project, even the most experienced contractor can't give you a perfectly accurate price until the design is finalized.
Starting with a design-permit contract allows for accurate pricing based on real plans. If you have a set budget, make that clear to your designer or architect early on so they don’t create something you can’t afford to build.
In most cases, I recommend working with a design-build firm. This keeps communication flowing between homeowner, designer, and contractor. If a design choice increases cost, the designer can check with the GC, get an updated estimate, and adjust accordingly. You sign an initial contract for design and permitting (a fraction of the total cost), then a separate build contract once engineering is complete. This structure also creates an incentive for your contractor to earn the build by delivering value during the design phase.
If you’re working with an independent designer, be very candid about your budget. Once you begin collecting bids, if they come in too high, it becomes easy for the designer to blame the GC and vice versa. That disconnect can create unnecessary conflict. The more aligned and informed everyone is from the start, the smoother the project will run.
For ground-up new construction, pricing under a design-permit-build contract tends to be more accurate, as experienced contractors can make reasonable engineering assumptions without needing to tie into an existing structure.
TL;DR:
Design-permit contracts with an estimate are a smart way to approach remodels or additions. Be transparent about your budget and make sure you're designing within it.
