What is a fixed-price contract in LA construction?

A fixed-price (lump-sum) contract sets the total project cost at signing. The GC absorbs cost increases from hidden conditions, weather delays, and most change orders. Only owner-requested scope changes (added bathroom, upgraded materials) require formal change orders with price adjustments. NPLD operates exclusively on fixed-price contracts.

Who absorbs the cost of hidden conditions during an LA renovation?

On a fixed-price GC contract: the GC absorbs hidden conditions (rotted framing, surprise plumbing, asbestos in pre-1985 LA homes). On a CM contract: the owner pays all hidden-condition costs directly. NPLD's fixed-price contracts have absorbed $15K-$45K of hidden conditions per project on average.

Should I hire a general contractor or construction manager for my LA renovation?

For projects $30K-$2M, a general contractor on a fixed-price contract is almost always the right answer — certainty, single accountability, and GC absorbing hidden conditions deliver real value. For $2M+ new construction or luxury renovation, a construction manager makes sense if you want invoice transparency and have personal expertise to evaluate trade costs.

Can a general contractor also act as a construction manager?

Yes — some GCs offer both models depending on project scope. The choice usually depends on project size and owner preferences. NPLD operates exclusively on the GC fixed-price model because it delivers better cost certainty for our typical $30K-$2M project range.

What's the difference between a general contractor and a design-build firm?

A general contractor builds to drawings provided by the owner's architect/designer. A design-build firm (NPLD model) provides both design and construction services under a single contract. Design-build typically delivers 15-25% faster project timelines because design and construction phases overlap. See our design-build vs traditional contractor guide for full comparison.

What percentage does a construction manager charge in LA?

Construction managers in LA typically charge 4-8% of total project cost as a management fee. The owner pays this fee plus all actual subcontractor costs, permits, and materials. For a $2M project, the CM fee runs $80K-$160K, plus actual costs.

GC vs Construction Manager LA 2026: Fixed Price vs Cost-Plus

General Contractor vs Construction Manager — LA, 2026
	General Contractor (GC) — Fixed-Price (NPLD Model)	Construction Manager (CM) — Fee + Cost-Plus
Typical LA Price (2026)	Fixed-price contract — you pay one number	4-8% management fee + actual subcontractor costs
Lifespan	Project duration only	Project duration only
Warranty	Lump-sum contract; 10-20% margin built into price	Cost-plus contract; 4-8% management fee + open-book invoices
Install Time	Project length depends on scope (4-24 weeks typical LA)	Project length depends on scope (similar to GC)
Maintenance	Single point of contact (NPLD: Netanel Presman); GC handles all trades, scheduling, permits	CM coordinates trades, scheduling, permits; owner sees all invoices
Best For	Most LA renovations $30K-$2M — kitchen, bath, ADU, addition, full-home where the homeowner values certainty and single accountability.	$2M+ new construction or luxury renovation where the owner has time/expertise to manage invoice review and wants full cost visibility.

Option 1

General Contractor (GC) — Fixed-Price (NPLD Model)

Single fixed-price contract; GC carries cost overrun risk; one point of accountability.

Strengths

Single fixed price — no surprises after signing
GC carries cost overrun risk (hidden conditions, surprise plumbing, rotted framing)
Single point of contact — one phone number for all questions
Single warranty — no fighting between trade contractors

Weaknesses

Less invoice transparency — you don't see actual subcontractor costs
GC margin (10-20%) is baked into the price
Changes after contract require formal change orders

What Most LA Homeowners Get Wrong

The GC model's hidden value is the change-order absorption. On a $250K kitchen renovation, hidden conditions average $15K-$35K (rotted subfloor, surprise galvanized pipe, asbestos discovery). GC absorbs these. With a CM model, you pay all of them on top of base price plus the CM's percentage fee.

Best for: Most LA renovations $30K-$2M — kitchen, bath, ADU, addition, full-home where the homeowner values certainty and single accountability.

Option 2

Construction Manager (CM) — Fee + Cost-Plus

CM charges 4-8% management fee; owner pays subcontractor invoices directly; invoice transparency.

Strengths

Full invoice transparency — see every subcontractor cost
Lower management fee (4-8%) vs. GC margin (10-20%)
Better for very large projects ($2M+) where transparency matters
Owner can shop subcontractors competitively

Weaknesses

Owner carries cost overrun risk — hidden conditions = open wallet
Open-ended cost — no fixed price commitment
Owner must manage cash flow across multiple subcontractor invoices
More owner involvement required in trade decisions

What Most LA Homeowners Get Wrong

The CM model works mathematically only when project size is large enough that the percentage fee savings exceed the overrun risk. Math: $2M project at 6% CM fee = $120K vs. GC at 15% margin = $300K. Looks like savings — but on a $2M project, hidden conditions and change orders average $200K-$400K. CM model owner pays those costs; GC model owner doesn't.

Best for: $2M+ new construction or luxury renovation where the owner has time/expertise to manage invoice review and wants full cost visibility.