203(K) process?

[Mathew Deines]

I am sure the answer is somewhere on biggerpockets but can someone give me the short story on part of the process for a 203(k)? 

I have 2 friends, A is the contractor and B is the buyer. A only wants to make a small percentage for his time because B is his friend.

If the bid for renovations comes in at $15,000 but the needed repairs to get the property to a living standard only cost $10,000, does the contractor get to keep the difference? If the contractor only draws the $10,000, what happens to the other $5,000? 

Please let me know if you need more information.

Thanks