Utah Construction Contract Cost Plus or Fixed Fee
Understanding this form
This Construction Contract is designed to formalize an agreement between a contractor and an owner for a construction project. It can operate under a cost-plus or fixed-fee payment structure, making it flexible for different financial arrangements. This contract outlines key responsibilities, such as the scope of work and insurance requirements, while ensuring compliance with the laws of Utah, distinguishing it from other types of construction contracts.
What’s included in this form
- Work site details specifying the construction location.
- Permits and approvals to be obtained by the contractor.
- Conditions regarding soil and excavation responsibilities.
- Insurance requirements for general liability and workers compensation.
- Change order process for scope modifications during the project.
- Contract price details reflecting the cost-plus payment arrangement.
- Terms concerning late payments and defaults.
- Warranties limited to workmanship defects within a one-year period.
When this form is needed
This form should be used when a contractor and an owner are entering into a construction agreement where the pricing structure is based on either the cost incurred plus a fee or a fixed fee amount. It's appropriate for both residential and commercial projects in Utah, particularly when there is a need for flexibility in scope changes and project costs.
Who needs this form
- Contractors seeking to establish formal agreements for construction projects.
- Property owners planning construction work on their property.
- Individuals or businesses in Utah needing a clear outline of responsibilities and payment terms.
- Any party interested in documenting changes to the construction scope through written change orders.
Steps to complete this form
- Identify and enter the names and addresses of the owner and contractor.
- Specify the work site location where the project will take place.
- Detail the scope of work and any applicable permits that need to be obtained.
- Fill in the payment structure, indicating whether it is cost-plus or fixed fee.
- Review, sign, and date the contract to finalize the agreement.
Notarization guidance
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.
Avoid these common issues
- Failing to clearly define the scope of work leading to disputes later.
- Not obtaining necessary permits before starting the project.
- Neglecting to document changes to the project scope with proper change orders.
- Overlooking insurance requirements that can lead to liability issues.
- Ignoring the late payment terms, which can affect project continuity.
Benefits of completing this form online
- Immediate access to a professionally drafted form tailored to legal requirements.
- Convenient and secure online download, allowing for easy editing before use.
- Reliable legal language that simplifies the contract process for both contractors and owners.
- Environmentally friendly option by eliminating the need for paper forms.
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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.
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 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.
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-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 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-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.
