The important issues in a cost plus contract are how will the subs be selected and paid and how will the GC's own forces be paid. Overhead is not a cost of the work unless it takes place on site. The difficulty is that few home builders or owners are capable of managing the contract without training. It should not be confused with a Time and Materials contract. Because it can reduce the owner's pricing control, a Guaranteed Maximum Price is often used. A shared Savings feature is another good idea. But because most of the costs are from subs, how the GC writes the sub contracts is critical. For large projects the sub contract work is bid competitively after the GC'S is hired and the owner approves the bidders and picks the winner. This post was edited by Renovator8 on Sun, Aug 11, 13 at 10:57

"In my experience a common reason a builder doesn't want an architect involved is that he might be forced to build in a different manner and/or he doesn't want someone overseeing his performance and enforcing the terms of the contract." Or it may be that the builder has seen plenty of times when an architect designed something that was prohibitively expensive to build. Perhaps the architect felt it would improve the feel of the house to have all the bathrooms as far apart from each other as physically possible, which requires way more copper pipe and multiple waste stacks. In a builder-designed home the bathrooms are usually clustered so they stack on top of each other or are somewhat near another room that needs water (like a laundry room). There are many reasons a builder can prefer not working with an architect, it really doesn't have anything to do with being "sophisticated" or not.

Is this a national tract builder? Sounds like this builder doesn't want to be bothered. I wonder how else he'll not be accommodating. I am building on a lot where I have to use the builder with the lot. However I was given a choice of using one of his designs, tweaking one of his designs, or having his "designer" (really a glorified draftsman) work with me to design a house. I knew the style of house I wanted and the layout (a U shape around a courtyard) and worked with his draftsman for 9 months. My only cost was to put a down payment of $5,000 for the design services to design my own. If I decided to pass on the lot, I owned the drawings and plans that were done. Once we signed the contract, that $5,000 was absorbed into the price of the house. Meaning, we were given a contract price to build the house less the $5,000. Have you taken the time to vet the builder? Check out his other customers and how they feel about him? Seen is work in all stages? Our builder has no problems if we go to his different work sites to check on his other projects as long as we don't bother his subs and as long as we stay out of the way of any less than safe areas. He wants us to see the houses in all stages to reassure ourselves that he builds a quality product and he's told us to go to his projects and talk to his clients. We have, and everyone has had nothing but positive things to say. Even those who have had problems with their builds. They all felt he is honest, upstanding and takes their calls and corrects the problems. Or as he said to me, "Trust me. Things will go wrong. However, they will all get fixed to your satisfaction." We are building on one of the last desirable lots in our downtown area, yet if I had turned up negatives about the builder, I would have run. The stress and anxiety wouldn't have been worth it, no matter how "wonderful" the lot was.

What @JDS said: what 300K$ buys is radically different in different parts of the country. 10K/300K is 3%. Not terribly high but it really depends on where that 300K$ is going. The original estimate for my project from a designer was 6K$ and will probably end up at 10K$ ... but I changed the scope a lot. I didn't need an architect and everyone compliments her results, both the design and plans. She went with me to get the permits, etc. A good friend who is an architect said he thought I still got a very good deal. Commercial architects (which he was) charge around 15% of the project, but that includes project management, including sending/out processing RFPs and contractor management.