Cost Plus Software for General Contractors, Home Builders, and Remodelers
If you're a cost-plus builder, you've likely struggled to find financial software to manage your business accurately. That's because most residential construction financial software and project management tools are built with a fixed-cost builder in mind.
But being cost-plus presents unique challenges, meaning you need construction software that thinks like you do.
In this article, we'll explore what makes cost-plus software different, how it benefits cost-plus remodelers and builders, how to choose the right cost-plus software for your residential construction business, and our recommendations for the best cost-plus program on the market.
What is Cost Plus Software?
Cost-plus builders charge clients a percentage markup on each actual dollar spent for labor, materials, and trade partners on their remodeling or custom home-building projects. This method gives homeowners more transparency and allows for real collaboration on scope and price with all stakeholders, treating the project like an open book without a "guaranteed maximum price."
Cost plus software is a digital tool designed specifically for cost plus builders that allows them to streamline project budgeting and costs by tracking those actual expenses plus their markup.
It specifically helps builders do two things:
Show Transparency with Clients: Builders using cost-plus software can clearly show clients all project costs, enhance their trust, and reduce budget-related questions.
Improve Financial Control: Cost-plus software allows contractors to monitor expenses closely, ensuring profitability and minimizing budget overruns and lost revenue due to change orders.
Most construction management software programs on the market are generic and cater to fixed-cost pricing models. They don't have all the features necessary to track financial metrics for cost plus successfully.
Why General Contractors, Home Builders, and Remodelers Need Cost Plus Software
If you're a cost-plus builder, you need systems that work specifically for your business and programs that understand the challenges you face when building accurate estimates and billing clients.
Very few dedicated software programs made for the construction industry fit that bill. Most are designed to service fixed-cost construction companies and attempt to "adapt" to cost-plus billing methods.
Buildwise is the only financial management software program for residential contractors specifically designed for cost-plus builders.
Buildwise offers numerous benefits for cost-plus contractors and remodelers, such as structured estimating and change order formats that detail line-item job costs, helping to ensure transparency.
It also provides real-time cost tracking and detailed reporting specific to cost plus construction, keeping contractors aware of project budgets and highlighting change orders that might otherwise be missed. Additionally, Buildwise's automated client summary reports make it easy to keep clients informed about their budget and project progress.
Key Features to Look for in Cost Plus Software
A good cost-plus software program - like Buildwise, stands out from other tools by its ability to build and share estimates and change orders with line-item costing and a transparent, pre-determined markup. It also excels in expense management, allowing contractors to set charge-out rates for internal team members, ensuring budgets and billing align with cost-plus contracts.
Additionally, it provides real-time visibility into gross profit from all markups, including hidden markups on internal labor, helping businesses ensure profitability.
Estimating for Cost Plus
Buidwise provides multiple options for formatting the estimate that aligns with the cost-plus billing model. In contrast, software built for fixed-cost construction doesn't provide the right formats for cost plus.
Change Orders for Cost Plus
Buildwise streamlines the change order process by offering detailed, itemized breakdowns that clearly outline total project costs, including allowances. This ensures clients have a transparent view of adjustments, empowering them to make informed decisions and maintain confidence in their project budget.
Setting Pay and Charge Rates for Cost Plus
Buildwise is the only software in the construction space that properly manages the method of marked-up labor inherent to cost-plus projects.
Managing Unbillables
Cost-plus software should allow you to manage labor performed, materials consumed, or trade work done that you are not billing the client for. Buildwise is the only software on the market that manages unbillables accurately in cost plus construction.
Cost to Completion
Buildwise is the only software that ensures your budget calculates gross profit margin accurately in a cost-plus model, whether the project is under, on, or over budget. The math is different between the two billing models and a one size fits all approach doesn't work for cost plus remodelers.
Job Costing
Buildwise illuminates problems hiding in plain sight through our industry unique job costing report. Managing budgets in other software is like flying an airplane with no instruments.
Client Summary
Your software should be able to share a simplified and automated version of the main budget instead of confusing clients with a large budget they don't understand. Buildwise can.
How Cost Plus Software Enhances Client Relationships
Transparency is the cornerstone of successful residential construction projects, as homeowners need confidence that their budgets are respected and their expectations are met.
A cost-plus contract supports this by offering a detailed breakdown of project costs, from materials to labor, and an agreed-upon markup. This level of openness builds trust, reassuring clients that their money is being spent wisely and aligned with the builder's commitments.
Cost-plus software takes this trust to the next level by providing real-time cost tracking, comprehensive invoices, and organized documentation that's easy to share. By giving clients clear insights into expenses and progress, builders create a collaborative environment that reduces misunderstandings and fosters positive relationships.
Ultimately, this transparency doesn't just help the current project run smoothly—it lays the groundwork for long-term partnerships, repeat business, and referrals.
Benefits of Implementing Cost Plus Software
Cost-plus contracts can be advantageous in today's market, as projects are becoming more customized and often begin without fully detailed plans. In a fixed-cost model, this lack of clarity poses significant risks for home builders because there are so many unknowns that they can't assign hard costs to, which can translate into a loss of profit if not managed properly during the build.
Learn more about the differences between cost-plus and fixed-cost contracts.
But even in a cost-plus model, it's easy to miss costs if you aren't tracking expenses properly. That's where cost plus software comes in.
How Cost Plus Software Saves You Money
Cost-plus contracts help protect builders from absorbing costs that exceed the budget for labor, materials, or trades, as these overages are passed directly to the client.
They also allow for early detection of cost overruns, enabling proactive communication with clients to address issues. They also provide visibility into added scope items completed by the team, ensuring change orders are created to capture these extra costs.
Using software built for cost-plus builders streamlines data entry by eliminating the need to input information in multiple places, saving time for everyone involved—from on-site team members to project managers and the business owner.
By assigning project and cost coding tasks to those directly responsible, the process becomes more efficient, reducing the workload for downstream roles like project managers and bookkeepers.
How Cost Plus Software Reduces Errors
The biggest worry cost-plus remodelers have is not billing for all of the actual costs expended on the project. Omissions lead to lost profits, so finding a way to track those billings reliably is critical.
It's incredibly easy to make errors - like forgetting to bill for actual costs for a change order, for example, when tracking budgets on manual spreadsheets. That's because spreadsheets are editable, so you risk accidentally deleting formulas or removing line items.
They also require information to be copied to other destinations manually, increasing the chance of missed data or incorrectly copied numbers. By using cost-plus software like Buildwise, you rely on fewer places where data is entered, thereby reducing the potential for human error.
How Cost Plus Software Makes Client Communication Easier
When you have software that automatically captures data and generates real-time reports, it becomes easier to share that information with clients and keep them up to date on their remodel.
A good financial management software program designed for cost-plus should have a built-in client summary function that you can simply attach to your invoice to keep clients up to speed.
Daily Logs is a communication tool that streamlines how residential remodelers and custom builders document on-site activities by capturing completed tasks to unforeseen delays or issues requiring action. By maintaining a clear and detailed project history, Daily Logs ensure effective communication and keep everyone on the same page throughout the project.
And yes, Buildwise does that, too.
Tips for Choosing the Right Cost Plus Software for Your Business
The best software for your residential construction business is the one you'll use, so it's important to consider all the functionality your business requires and find the right software solution to match.
Here are some key tips to consider when choosing cost-plus software:
It was purposely built for cost-plus billing models. Many software programs say they can adapt to Cost Plus but aren't built with the intentional features that cost plus accounting requires.
Manages cost-plus estimates and change orders. The right program will have the correct display views for cost plus estimates and change orders to ensure you're providing the right level of transparency.
Correctly measures profit metrics. Software created specifically for cost-plus builders will properly calculate the distance between fully burdened 'pay rates" vs 'charge rates.'
Can properly manage unbillables. The software you choose should easily account for materials, labor, or trade work that isn't being billed to the client.
Uses "Cost Plus Math." Financial management software for cost-plus builders properly manages the math in the cost to completion or project budget when you are under, on, or over budget.
Has a Client Summary function. When it comes to cost-plus billing, I always say with great transparency comes great responsibility. This means that starting with an accurate estimate is key, but even more important is being able to update clients in real time as project costs are captured.
The Best Cost Plus Software for Contractors, Builders, and Remodelers
Cost-plus construction projects demand a specialized approach to job costing, one that standard software solutions often fail to deliver. Most financial management tools on the market are designed for fixed-cost models, leaving cost-plus builders struggling to manage real-time expenses, track changes, and maintain accurate profitability.
Buildwise was created specifically for specialty contractors, like cost-plus builders, providing the tools and insights needed to manage projects with transparency and precision.
The Challenges of Cost-Plus Financial Management
Cost-plus contracts involve tracking actual expenses, adding an agreed-upon markup, and ensuring clients remain informed and confident about where their money is going.
Traditional methods, like spreadsheets, can't keep up with the complexity of this model. Errors from deleted formulas or disconnected data often lead to missed profits and client frustration. Buildwise eliminates these risks, offering a single platform tailored to the cost-plus approach.
Buildwise Features for Cost-Plus Success
Real-Time Job Costing: Track actual versus estimated costs and see profit margins update live across all cost categories.
Change Order Management: Easily create, share, and approve change orders directly with clients, ensuring additional expenses are billed accurately and on time.
Integrated Time Tracking: Team members submit cost-coded time through a mobile app, automatically updating labor hours and eliminating delays in reporting.
Transparent Reporting: Generate job costing reports purpose-built for cost-plus builders, making communicating budget updates to clients easy.
Solving Cost-Plus Pain Points
Cost-plus builders often face challenges like late timesheets, lost receipts, disconnected systems, and complex accounting software. Buildwise addresses these issues by:
Streamlining data collection into a centralized system.
Automating cost coding for receipts, trade invoices, and time entries.
Ensuring every expense is captured and reflected in real-time job costing reports.
Built for Cost-Plus Builders by a Builder
After 21 years in residential construction and over 5,000 hours of coaching builders, Bryan Kaplan, the creator of Buildwise, recognized the need for a tool that truly supports cost-plus businesses. Buildwise integrates years of his experience as a cost-plus builder into an easy-to-use platform designed to simplify processes and maximize profitability for remodelers and custom home builders.
The Cost-Plus Advantage with Buildwise
Buildwise stands apart by focusing on the specific needs of cost-plus builders. Its drag-and-drop scheduling, real-time cost tracking, and client-friendly reporting create a seamless process that keeps projects on track and clients happy.
If you're ready to streamline your cost-plus business, enhance profitability, and build stronger client relationships, Buildwise is the solution you've been waiting for.
Why You Should Invest in Buildwise Now
As an early-stage software business, there are many benefits to getting in on the ground floor of Buildwise.
For example, Buildwise offers you direct access to a 25+ year construction veteran, coach, and founder who provides personalized feedback and guidance. Rather than just focusing on software use, you'll receive advice on strengthening your business as a whole.
By joining, you'll become part of a growing, private community of builders from across the country, sharing ideas and collaborating to improve.
The Bottom Line on the Importance of Using Cost Plus Software in Your Residential Construction Business
Cost-plus software is essential for residential builders who charge clients based on actual project costs plus a set markup. Unlike traditional fixed-cost software, cost-plus software is designed to meet the unique needs of cost-plus builders by offering transparency, better financial control, and real-time cost tracking. This specialized software helps builders share detailed, itemized estimates and change orders with clients, fostering trust and minimizing budget-related questions.
By accurately tracking all expenses—labor, materials, and trade costs—builders can avoid missed billings and see early indicators of budget overruns.
Additionally, cost-plus software like Buildwise ensures that builders maintain profitability by calculating gross profit margins correctly and provides a way to factor in unbillables.
Cost-plus software also enhances client relationships by providing clear, up-to-date reports on project costs, which helps prevent confusion and build long-term trust. With real-time job costing and integrated change order management, builders can keep clients informed, ensuring transparency throughout the project.
By implementing a tailored solution like Buildwise, cost-plus builders can significantly reduce errors that result in additional fees, improve operational efficiency, and create more accurate financial forecasts, ultimately leading to increased profitability and smoother project execution.
Take control of your cost-plus projects and boost your profitability with Buildwise, the financial management software designed specifically for cost-plus builders. Streamline job costing, change orders, and client communication to ensure transparency, accuracy, and real-time insights.
Ready to improve your bottom line? Sign up for a FREE 14-day trial of Buildwise today.
