When you're planning to invest hundreds of thousands of dollars in a custom home, one question keeps many potential homeowners awake at night: "Am I getting the best value for my investment, or am I unknowingly paying hidden markups and inflated costs?"
This concern isn't paranoia—it's a legitimate response to how the traditional general contractor model works. Most custom home builders operate on a markup system that creates an inherent conflict of interest: the more they can charge you for subcontractor work and materials, the more profit they make. Your goal of minimizing costs while maximizing quality directly conflicts with their profit incentive.
At Moderno Construction Management, we've structured our entire business model differently. Our transparent, open-book approach to custom home construction in Prior Lake, Lakeville, and the South Metro typically saves clients 10-15% compared to traditional general contractor pricing—often $50,000 to $100,000 or more on custom home projects. But the benefits extend far beyond dollar savings to include peace of mind, better decision-making, and true partnership throughout your build.
Before we explain how our construction management approach differs, it's important to understand how traditional general contractors operate and why this model often works against homeowner interests.
Most general contractors work on what's called a "cost-plus" or fixed markup model. Here's how it typically works:
This creates several problems:
Conflict of Interest: The contractor profits more when costs are higher, directly conflicting with your interest in controlling costs while maintaining quality.
Limited Transparency: You don't know what the actual labor and material costs are, making it impossible to evaluate whether you're receiving fair pricing.
Restricted Competition: General contractors often work with preferred subcontractors who may not provide the most competitive pricing, since the contractor can simply mark up whatever bid they receive.
Incentive Misalignment: When problems arise that require additional spending, the contractor actually benefits financially from these issues through their markup, reducing their motivation to prevent them.
Given these obvious drawbacks for homeowners, why does this model remain so common? Several factors contribute:
But just because a model is traditional doesn't mean it's optimal for homeowners. That's why we've structured Moderno Construction Management around a fundamentally different approach.
Instead of working as a traditional general contractor, Moderno functions as your dedicated construction manager—essentially your advocate and representative throughout the building process. This structural difference creates entirely different incentives and outcomes.
Our construction management approach operates on these core principles:
Fixed Management Fee: We charge a predetermined management fee for our services rather than marking up subcontractor costs and materials. This fee covers our expertise, oversight, coordination, and project management throughout your build.
Open-Book Pricing: You see actual subcontractor bids and material costs—no hidden markups or mysterious line items. Every dollar spent on your project is documented and transparent.
Competitive Bidding: We solicit competitive bids from multiple qualified subcontractors for each aspect of your project, ensuring you receive appropriate pricing while maintaining quality standards.
Aligned Incentives: Our compensation doesn't increase when costs rise, so we're motivated to help you achieve your goals efficiently. Your success is our success.
Fiduciary Responsibility: We function as your advocate, working directly for your interests rather than trying to maximize markup on your project spending.
When we say "open-book," we mean complete financial transparency throughout your project:
This level of transparency might seem unusual if you're accustomed to traditional contractor relationships, but it's standard practice in our construction management approach. We have nothing to hide because our compensation isn't dependent on marking up your costs.
Let's examine how our transparent construction management model typically saves clients 10-15% or more compared to traditional general contractor pricing, using a hypothetical but realistic custom home project in Prior Lake or Lakeville.
Traditional General Contractor Approach:
Moderno Construction Management Approach:
But the savings often extend beyond the straightforward markup differential:
Competitive Bidding Savings: Because we solicit competitive bids from multiple subcontractors, the baseline costs are often lower than what a general contractor's preferred subcontractors might charge. This can add another 5-10% in savings: $30,000-$60,000
Material Purchasing: With open-book pricing, we can help you source materials directly or through our established supplier relationships without markup, potentially saving another 3-5%: $18,000-$30,000
Reduced Change Orders: Our comprehensive planning and transparent communication typically result in fewer surprise change orders, and when changes are necessary, you pay actual costs rather than marked-up estimates: $10,000-$20,000
Total Potential Savings: $118,000-$170,000 on a $750,000 project budget
Even accounting for our management fee, clients typically save $50,000-$100,000 or more compared to traditional general contractor approaches, while receiving superior oversight, transparency, and advocacy throughout their build.
While financial savings are significant and tangible, our construction management model provides additional value that's harder to quantify but equally important to your overall experience and satisfaction.
When you understand actual costs, you can make informed decisions about where to invest and where to economize. Instead of receiving a single bottom-line number, you can see the cost implications of different choices:
This transparency empowers you to make choices that align with your priorities and budget rather than guessing whether you're overpaying or making uninformed compromises.
Building a custom home is stressful enough without worrying whether your builder is working in your interest or their own. Our construction management model eliminates this concern entirely.
When you know that your construction manager's incentives align with yours, you can trust their recommendations and focus on the exciting aspects of creating your dream home rather than worrying about hidden costs or conflicts of interest.
Our fee-based model creates accountability to you rather than to profit maximization. This manifests in several important ways:
Proactive Problem Prevention: We're motivated to anticipate and prevent issues rather than benefiting from change orders that address problems after they arise.
Quality Advocacy: When subcontractor work doesn't meet standards, we advocate firmly for corrections because our reputation—not our markup—determines our success.
Honest Recommendations: We can provide genuine guidance on where premium materials make sense and where standard options suffice, without financial incentive to steer you toward more expensive choices.
Long-Term Thinking: Our three-generation reputation in the South Metro depends on client satisfaction, not individual project margins, encouraging decisions that serve your long-term interests.
Understanding how our transparent construction management model works in practice helps clarify why it produces better outcomes for custom home clients in the South Metro.
We begin every project with comprehensive consultation to understand your vision, needs, budget parameters, and timeline goals. Unlike traditional contractors who might provide a single fixed bid, we work with you to develop a detailed budget that shows:
This initial planning phase, informed by our experience across 800+ custom builds, sets realistic expectations and establishes the foundation for transparent communication throughout your project.
For each major aspect of your project, we solicit competitive bids from multiple qualified subcontractors. This process includes:
Qualification: We only bid projects to subcontractors who meet our quality standards and have proven track records in the South Metro. Our three generations of experience have helped us identify the area's finest craftsmen.
Detailed Specifications: We provide identical project specifications to each bidder, ensuring apples-to-apples comparison.
Bid Review: You receive all bids for review and participate in the selection decision. We provide guidance based on our experience, but you make the final choice.
Contract Negotiation: We negotiate directly with selected subcontractors on your behalf, ensuring clear expectations and fair terms.
This competitive process, combined with our established relationships throughout the South Metro, consistently produces better pricing than single-source arrangements typical of general contractor models.
During construction, our role focuses on comprehensive project management that protects your interests:
Throughout construction, you maintain complete visibility into project finances. Every invoice, receipt, and payment is documented and available for your review. If questions arise about any cost, we provide complete documentation to explain and justify the expense.
Our transparent approach continues through project completion:
Actually, our construction management model simplifies your experience rather than complicating it. While we involve you in major decisions and provide transparency into the process, we handle all the complexity of coordinating multiple subcontractors, managing schedules, and ensuring quality.
The difference is that you understand what's happening and why, rather than being kept in the dark while a general contractor manages everything behind closed doors. Most clients find this transparency reassuring rather than overwhelming.
Several factors ensure genuine competitive pricing:
Unexpected situations do occasionally occur in construction—soil conditions different than anticipated, hidden issues discovered during demolition, or code requirements that exceed initial expectations. Our transparent model benefits you significantly in these situations:
Early Identification: We're incentivized to surface potential issues early when they're less expensive to address, rather than hoping they won't arise.
Actual Cost Change Orders: When changes are necessary, you pay actual subcontractor costs rather than marked-up estimates. This typically saves 15-30% on change order work.
Alternative Solutions: Because we're not profiting from increased costs, we're motivated to find cost-effective solutions rather than simply accepting expensive fixes.
Transparent Documentation: Any change order includes complete documentation of why it's necessary and actual costs involved.
Our management fee is typically 8-12% of project costs, while traditional general contractor markups range from 15-30% or more. But the comparison isn't quite this straightforward, because:
The net result is that total project costs typically run 10-15% lower than traditional general contractor approaches, even after accounting for our management fee.
The construction management approach benefits any building project, but it's especially valuable for custom homes where complexity, personalization, and investment levels make transparency and aligned incentives particularly important.
Building a custom home involves countless decisions about design, materials, finishes, systems, and features. Each decision has cost implications, and understanding these costs empowers better decision-making.
When building in our developments like Scenic Bay Estates, Cardinal Pass, Harvest Bluffs, or Holman Addition, or on your own acreage property, you benefit from transparent discussion of how site-specific factors impact costs—from foundation work to utility infrastructure to landscaping.
Custom homes represent substantial financial investments—often the largest single investment many families make. At these investment levels, the 10-15% savings our model typically provides translates into significant dollar amounts that can be redirected toward upgrades, furnishings, or other priorities.
The peace of mind that comes from knowing your construction manager is working solely in your interest becomes increasingly valuable as project scope and investment increase.
Custom homes are typically forever homes—places where families plan to live for decades or even generations. Our construction management model's quality focus serves these long-term interests better than approaches driven by maximizing short-term markup.
When we recommend investing in superior foundation waterproofing or premium HVAC systems or enhanced structural elements, you know these recommendations serve your long-term interests rather than our profit margins.
The value of our construction management model becomes most evident through the experiences of clients who've built with Moderno. Several themes consistently emerge in client testimonials:
Clients consistently report feeling empowered rather than overwhelmed by our transparent approach. Instead of receiving mysterious bottom-line numbers, they understand the cost structure of their project and can make informed decisions about priorities.
The transparency inherent in our model builds trust that traditional contractor relationships often lack. When clients can see exactly where their money goes and know their construction manager's incentives align with their own, they can focus on the exciting aspects of creating their home rather than worrying about hidden costs.
Beyond financial savings and peace of mind, clients report superior outcomes—homes that better reflect their vision, higher quality construction, and smoother building processes with fewer surprises and complications.
These outcomes result directly from our construction management model's alignment of incentives. When success comes from client satisfaction rather than maximizing markup, every aspect of project management naturally orients toward serving client interests.
Our commitment to transparent construction management extends beyond financial considerations to inform every aspect of how we work with clients.
Financial transparency naturally encourages broader communication transparency. We provide regular updates on project progress, surface issues proactively, and maintain open dialogue about any concerns or questions that arise. This communication style reduces stress and ensures no surprises during your build.
From our permitting assistance to our quality control inspections to our final walkthrough procedures, we document and explain our processes so you understand not just what we're doing but why and how. This transparency demystifies construction and helps you feel confident throughout your project.
We create detailed schedules that show when each phase of construction will occur and what factors might impact timing. Rather than providing vague completion estimates, we give you realistic timelines with explanation of variables that could affect the schedule.
If you're considering building a custom home in Prior Lake, Lakeville, or surrounding South Metro communities, we invite you to explore how our transparent construction management model can benefit your project.
Whether you're planning to build in one of our exclusive communities or on your own acreage property, our fee-based approach typically delivers significant financial savings while providing superior oversight, transparency, and peace of mind throughout your build.
The 10-15% savings our model typically provides—often $50,000 to $100,000 or more on custom home projects—represents real money that can enhance your home, furnish your spaces, or simply provide financial breathing room as you settle into your new property.
But beyond dollar savings, our construction management approach offers something even more valuable: genuine partnership with a team whose success depends on your satisfaction, whose incentives align perfectly with yours, and whose three generations of experience in the South Metro ensures you benefit from decades of accumulated wisdom and relationships.
Schedule a consultation to learn how our transparent, open-book approach can save you money while delivering superior results on your custom home project.
