What is a Preconstruction Services Agreement (PSA)?

Many builders offer a free estimate upon request as the first, more formalized part of engaging with a homeowner. In fact, Bluestone did this up until about 10 years ago too. It’s basically putting a sticker price on a project along with other builders and letting a homeowner say yay or nay. It’s quick, but like anything else that’s fast and furious, it’s not very effective. For one thing, builders don’t price apples-to-apples. For another, builders are never of equal caliber.

Building a house is one of the largest investments of time and resources you will make in your lifetime. There’s no getting around it, decisions involve both the “experience of it” and the longer-term, “living with it” — and both phases should be enriching.

Here’s the ticket: When a homeowner selects a builder based on a free estimate, they’re shortchanging the selection process and setting themselves up for budget problems down the road.

At Bluestone Construction, we offer a Preconstruction Services Agreement (PSA), which encompasses the drawings, specifications, allowances, and budget to be incorporated into the architecture and design of the home. While PSAs are less commonly used, Bluestone owner Kevin Reed says, “I truly believe it’s the right way to select a builder.”

How a PSA works:

  1. We develop a relationship with the homeowner and anyone else involved in the project already (e.g. architect).
  2. We assemble a team of experts to fill in any gaps. This can include an architect, contractor, structural engineer, interior designer, and landscape architect.
  3. We provide our professional insight into the constructability of the plans, the material selection, preferred vendors, and design details.
  4. We help with selections for the project, offering our professional advice and steering the homeowner toward the best options. Our goal here is to define as many details and selections as possible.
  5. We create an initial budget with starting cost inputs. This is revised through our conversations with homeowners and project leads, to arrive at a final budget we can adhere to.
  6. We draft a project schedule so homeowners and participants understand what to expect and can commit accordingly.
  7. We work up plans and specifications that are “ready to build,” meet cost goals, and detail expectations for various inputs and labor.

Our Preconstruction Services Agreement (PSA) is drawn up for a fee, which covers the costs of our time and resources, and can take up to 2–3 months to complete.

Why we use a PSA

For one, a PSA is useful for cost management. Whereas a bid can ballpark costs, a PSA allows for more exact cost estimation, better decision-making, and a detailed budget to follow. This also provides more transparency into the project costs regarding labor and material costs. With these kinds of insights, a homeowner can knowledgeably make good decisions with their builder and team. If you are building a five-million-dollar home, you’re going to want all of the cost details — to know what you’re paying for — and the PSA provides this in spades.

Which leads us to our second point. A PSA pulls a team together and acts as a filter. Bluestone owner Kevin Reed explains, “Building a house is not like a commercial project. A homeowner and builder need to have rapport — it’s a year-long process, you’re going to be talking multiple times each week.” Compatibility is incredibly important. And, values should align. Kevin Reed shares that Bluestone’s priorities are quality, schedule, and price, in that order. If this doesn’t suit a homeowner’s style, it may be better that they go with a different builder. With a PSA, we are able to discover irreconcilable differences early on and prevent poorly spent time, resources, and energy for all involved.

At Bluestone Construction we take pride in offering fantastic service before, during, and after your home construction. As we complete the Preconstruction Services Agreement (PSA) with you, we provide cost, value, and construction timing experience to help you make sound design decisions and meet your goals. We also use it as a cost-effective way to begin our relationship with you and ensure we make a good fit. If you have questions about the PSA or about how we work, please take a look at our process page or contact us directly.