Pennsylvania Construction Contract Cost Plus or Fixed Fee
Understanding this form
The Construction Contract Cost Plus or Fixed Fee is a legal document that outlines the agreement between a contractor and a property owner for construction work. This form provides flexibility in payment arrangements, allowing for either a cost-plus structure or a fixed fee. It includes essential details such as the scope of work, work site, warranties, and insurance requirements, ensuring compliance with the laws of Pennsylvania. This distinguishes it from simpler construction agreements by addressing potential changes, permit responsibilities, and lien issues that may arise during the project.
Form components explained
- Work site location and responsibilities for obtaining permits.
- Clauses on soil conditions and liability regarding them.
- Insurance requirements for the contractor.
- Provisions for changes to the scope of work and pricing adjustments.
- Details regarding payment arrangements, including cost-plus and fixed fee options.
- Terms concerning late payment, default, and contract termination due to damage or destruction.
When to use this form
This Construction Contract should be used when a property owner wants to hire a contractor for construction services. It is particularly relevant in situations where the project scope may vary and costs need to be adjustable. Use this form when planning significant renovations, additions to a home, or new construction projects requiring a detailed agreement on payment methods and responsibilities.
Who this form is for
This form is intended for:
- Property owners seeking to hire contractors for construction projects.
- Contractors looking to formalize their agreements with property owners.
- Subcontractors who need clarity on their roles within a larger project.
- Anyone involved in construction activities in Pennsylvania, ensuring legal compliance.
How to prepare this document
- Identify the parties involved in the contract, including the owner and contractor information.
- Specify the work site location and explicitly state the project scope.
- Determine and enter the payment structure, whether cost-plus or fixed fee.
- Include any necessary insurance details and provisions for late payment.
- Ensure all changes to the work scope are documented in change orders, signed by both parties.
Does this document require notarization?
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
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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.
Common mistakes
- Failing to specify the project scope clearly, leading to disputes.
- Not obtaining necessary permits before starting work.
- Overlooking the importance of insurance coverage for liability.
- Neglecting to document verbal agreements in writing, especially change orders.
Benefits of completing this form online
- Convenience of instant downloading and printing from home.
- Editable fields allow for customization to fit specific project needs.
- Access to forms created by licensed attorneys, ensuring legal accuracy.
- Time-efficient process compared to drafting a contract from scratch.
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FAQ
Disadvantages of cost-plus fixed-fee contracts may include: The final, overall cost may not be very clear at the beginning of negotiations. May require additional administration or oversight of the project to ensure that the contractor is factoring in the various cost factors.
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 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 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.
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.
Firm Fixed Price (FFP) The price will be set on the buyer's request. A FFP should be used for a product or service that is a repeated process. As an example, a car manufacturer would enter into a FFP contract for a standard model car. The manufacturer knows what it takes to complete the car and the associated cost.
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%.