Before You Build
Fixed-price construction vs. cost-plus in Mexico.
Direct answer
Fixed-price contracts set one number for defined scope, shifting most cost risk to the builder — but only for what's actually defined; anything outside scope becomes a change order. Cost-plus contracts bill actual cost plus a fee, giving more flexibility for evolving designs but requiring more owner trust and active budget tracking. Neither is universally better — the right choice depends on how finished your design is and how much certainty you need going in.
The tradeoffs
What each structure assumes.
Fixed-price — assumes a finished designWorks best once drawings and selections are locked, so the number reflects real scope rather than a rough estimate padded for uncertainty.
Fixed-price — change ordersAnything outside the original defined scope becomes a formal change order, priced and approved separately.
Cost-plus — assumes an evolving designUseful when some decisions are intentionally left open, but requires transparent cost reporting to work fairly for the owner.
Cost-plus — active tracking requiredWithout regular, itemized reporting, cost-plus can drift. This only works well paired with real budget discipline.
Allowances, either wayBoth structures typically use allowances for selections not yet finalized (fixtures, finishes) — see the allowances guide for how those should be handled.
What this means for your project
Whichever structure fits your project, the same discipline applies underneath it: documented scope, tracked changes and transparent reporting.
Not sure which structure fits your project?
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