Arkansas Construction Contract Cost Plus or Fixed Fee
What this document covers
This Construction Contract is a legal agreement that outlines the terms of a construction project between a property owner and a contractor. It can be structured either as a cost-plus or fixed-fee arrangement, allowing flexibility in payment based on the project's nature. This form is essential for clearly defining the responsibilities of both parties, including scope of work, insurance, permits, and soil conditions. Unlike generic contracts, this form is tailored to comply with the laws of Arkansas, ensuring validity and enforceability.
Key parts of this document
- Work site: Specifies the location where the project will be constructed.
- Permits: Outlines the contractor's responsibility for acquiring necessary permits.
- Soil conditions: Clarifies that the contractor is not liable for existing soil conditions.
- Insurance: Details the types of insurance the contractor must maintain.
- Changes to scope of work: Describes the process for modifying project specifications.
- Contract price: Defines how costs will be calculated, whether fixed or cost-plus.
- Late payment/default terms: Explains consequences for overdue payments.
- Destruction and damage: Outlines responsibilities if the project is damaged.
- Warranty: Covers defects in workmanship and terms of warranty.
When to use this document
This form should be used when entering into a construction project where the payment structure may vary depending on costs incurred or a predetermined fee. It is particularly useful for renovations, new builds, or projects that may require modifications as they progress. If you are a property owner looking to ensure clarity and legal protection throughout the construction process, this contract will serve your needs.
Who should use this form
- Property owners initiating a construction project.
- Contractors seeking clear terms and conditions for their work.
- Subcontractors involved in projects under a principal contractor.
- Anyone needing a reliable framework for construction agreements in Arkansas.
Instructions for completing this form
- Identify the parties involved: clearly state the names of the owner and contractor.
- Specify the work site: include the exact location for the construction project.
- Detail the scope of work: outline what work will be performed and any limitations.
- Enter payment details: indicate whether the arrangement is cost-plus or fixed fee.
- List insurance requirements: ensure that all necessary insurance provisions are included.
Does this form need to be notarized?
Notarization is generally not required for this form. However, certain states or situations might demand it. You can complete notarization online through US Legal Forms, powered by Notarize, using a verified video call available anytime.
Common mistakes
- Failing to properly define the scope of work, leading to misunderstandings.
- Not specifying the project site accurately.
- Overlooking necessary permits, which can delay the project.
- Assuming the contractor will be responsible for soil conditions without clarification.
Benefits of completing this form online
- Convenience of digital access, allowing for quick download and easy editing.
- Reliability of forms drafted by licensed attorneys, ensuring compliance with state laws.
- Ability to customize the contract to meet specific project needs.
Form popularity
FAQ
In the cost plus a percentage arrangement, the contractor bills the client for his direct costs for labor, materials, and subs, plus a percentage to cover his overhead and profit. Markups might range anywhere from 10% to 25%.
A Cost-Based Pricing Example Suppose that a company sells a product for $1, and that $1 includes all the costs that go into making and marketing the product. The company may then add a percentage on top of that $1 as the "plus" part of cost-plus pricing. That portion of the price is the company's profit.
A fixed price contract sets a total price for all construction-related activities during a project. Many fixed price contracts include benefits for early termination and penalties for a late termination to give the contractors incentives to ensure the project is completed on time and within scope.
A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract.
A cost-plus contract is an agreement to reimburse a company for expenses incurred plus a specific amount of profit, usually stated as a percentage of the contract's full price.
A cost-plus contract, also known as a cost-reimbursement contract, is a form of contract wherein the contractor is paid for all of their construction-related expenses. Plus, the contractor is paid a specific agreed-upon amount for profit.
A cost-plus fixed fee contract is a specific type of contract wherein the contractor is paid for the normal expenses for a project, plus an additional fixed fee for their services.
Cost Plus Contract Disadvantages For the buyer, the major disadvantage of this type of contract is the risk for paying much more than expected on materials. The contractor also has less incentive to be efficient since they will profit either way.
