This form is a Construction Contract that may be executed with either a cost plus or fixed fee payment arrangement. The form contains the following additional subject matters and complies with the laws of the State of Florida: scope of work, work site, warranty and insurance.
Cost plus construction is a type of contract agreement commonly used in the construction industry. It involves the client paying the contractor for the actual cost of materials, labor, and other expenses, plus a predetermined percentage or fee for profit. This method aims to provide transparency and allow the client to have control over the project's budget, while also compensating the contractor for their time and effort. The main advantage of cost plus construction is that it offers flexibility in terms of the project's scope and specifications. It is ideal for situations where the client wants to make changes or additions during the construction process, as the contractor can adjust the expenses accordingly. This type of contract is often used when it is difficult to accurately determine the overall project cost upfront. There are different types of cost plus construction contracts, each with its own variations: 1. Cost Plus Fixed Fee (CUFF): In this type of contract, the contractor receives a fixed fee or a percentage of the total project cost as profit. For example, if the project cost is $100,000 and the fixed fee is 10%, the contractor would receive $10,000 as profit. 2. Cost Plus Percentage of Cost (CPC): Under this contract, the contractor is compensated based on a percentage of the actual project cost. For instance, if the project cost is $100,000 and the agreed percentage is 5%, the contractor's profit would amount to $5,000. 3. Guaranteed Maximum Price (GMP): In a GMP contract, the client and contractor agree on a fixed maximum price. The contractor is responsible for completing the project within this budget, and any savings from cost efficiencies may be shared between the client and contractor. However, if the actual costs exceed the maximum price, the contractor absorbs the additional expenses. 4. Cost Plus with a Negotiated Fee: This type of contract allows the client and contractor to negotiate the fee percentage or fixed fee based on the scope and complexity of the project. It provides room for customization, ensuring a fair arrangement for both parties. To illustrate cost plus construction with an example, imagine a homeowner who wants to renovate their kitchen. They hire a contractor under a cost plus fixed fee contract. The contractor estimates the project cost to be $50,000, and the agreed fixed fee is 10%. As the project progresses, the contractor incurs expenses of $40,000 for materials and labor. In this case, the contractor's profit would be $4,000 (10% of $40,000). Therefore, the total cost for the homeowner would be $44,000 ($40,000 + $4,000). In summary, cost plus construction contracts offer flexibility, transparency, and control over project budgets. Various types, such as cost plus fixed fee, cost plus percentage of cost, guaranteed maximum price, and cost plus with a negotiated fee, cater to different client needs and project requirements.
