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 with upset is a type of contract commonly used in the construction industry, where the client agrees to pay the construction company for all the costs incurred during the project, along with an additional amount known as the "upset." The upset is usually a fixed percentage or a lump sum added to cover the contractor's overhead expenses and generate profit. This type of construction contract provides more transparency and accountability compared to fixed-price contracts. It allows for a more flexible approach to budgeting and incorporates any unexpected costs that may arise during the construction process. There are several types of cost plus construction contracts with upset, each with its own variations and conditions. Some notable ones include: 1. Cost Plus with Fixed Fee: In this type of arrangement, the contractor receives reimbursement for the actual costs incurred, such as materials, labor, equipment, and subcontractor services. Additionally, a fixed fee or percentage is added to cover the contractor's profit margin and overhead expenses. 2. Cost Plus with Guaranteed Maximum Price (GMP): With this contract type, a maximum limit or cap on the total cost is set, beyond which the client is not liable to pay. The contractor is responsible for managing the project within the specified budget while still receiving reimbursement for actual expenses and an upset amount. 3. Cost Plus with Percentage Fee: Here, the contractor charges a percentage fee based on the project cost instead of a fixed fee or lump sum. This encourages efficiency and cost-effectiveness, as contractors have a vested interest in keeping the costs low to maximize their profit. 4. Cost Plus with Incentive: In certain cases, a contractor may agree to a lower fixed fee or percentage, but with the opportunity to earn incentives or bonuses, such as completing the project ahead of schedule or achieving specific quality goals. It is essential for clients considering cost plus construction contracts with an upset to clearly define the scope of work, project specifications, and terms of payment. A comprehensive agreement should be signed to protect both parties' interests and avoid any potential disputes. Cost plus construction with upset is a beneficial option for clients who prefer transparency, flexibility, and are willing to share project risks with the contractor. It ensures that the actual costs and expenses incurred during the construction process are accounted for, while keeping the contractor's profit margin intact.
