New Mexico Construction Contract Cost Plus or Fixed Fee
Understanding this form
This Construction Contract Cost Plus or Fixed Fee is a legal document that establishes a framework for construction projects, outlining terms between the owner and contractor. It allows for either a cost plus or fixed fee payment structure and ensures compliance with state laws, specifically in New Mexico. This form covers essential topics such as the scope of work, work site, warranties, and insurance, distinguishing it from other construction contracts by its flexibility in payment terms.
When to use this form
You should use this form when you are entering into a construction agreement where payment can be structured as either a cost plus fee or a fixed fee. This contract is particularly useful when the scope of the project may evolve, requiring flexibility in costs or when additional work is anticipated.
Who can use this document
- Property owners seeking to hire contractors for construction projects.
- Contractors looking for a legally binding agreement outlining payment terms.
- Individuals or businesses involved in residential or commercial construction projects within New Mexico.
Instructions for completing this form
- Identify the parties involved, including the owner and contractor.
- Specify the work site address and provide relevant project details.
- Outline the payment structure, indicating whether it will be fixed fee or cost plus.
- Enter additional clauses as necessary, including change order conditions.
- Have all parties sign and date the agreement to validate it.
Does this document require notarization?
Notarization is not commonly needed for this form. However, certain documents or local rules may make it necessary. Our notarization service, powered by Notarize, allows you to finalize it securely online anytime, day or night.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Typical mistakes to avoid
- Failing to specify the payment method clearly, leading to misunderstandings.
- Not obtaining necessary permits before starting construction work.
- Ignoring the importance of documenting changes to the scope of work.
- Overlooking the requirement for signatures from all parties involved.
Advantages of online completion
- Easily editable for customization based on specific project needs.
- Immediate access to a legally vetted agreement without the need for drafting from scratch.
- Reduction in time and costs typically associated with legal consultations.
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FAQ
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 fixed-price contract is a type of contract where the payment amount does not depend on resources used or time expended. This is opposed to a cost-plus contract, which is intended to cover the costs with additional profit made.
A cost plus percentage of cost contract or CPPC is a cost reimbursement contract containing some element that obligates the non-state entity to pay the contractor an amount, undetermined at the time the contract was made and to be incurred in the future, based on a percentage of future costs.
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 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.
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.
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.
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%.