Virginia Construction Contract Cost Plus or Fixed Fee
About this form
The Construction Contract Cost Plus or Fixed Fee is a legal document used to establish a formal agreement between a contractor and a property owner for construction projects. This contract allows for flexibility in payment arrangements, either based on actual costs incurred plus an agreed fee or a fixed price. Unlike standard contracts, it addresses specific issues such as the scope of work, site conditions, and payment terms to ensure clarity and compliance with Virginia state laws.
What’s included in this form
- Work site location and description of the property.
- Permits and regulatory approvals required for construction.
- Responsibility regarding soil conditions at the work site.
- Insurance requirements for general liability and workers compensation.
- Change order procedures for modifications to the scope of work.
- Payment terms including late payment provisions.
- Warranty on workmanship and materials used in the project.
Situations where this form applies
This form is useful when a property owner wishes to contract a builder or contractor for a construction project, particularly when there is uncertainty about total project costs. It is applicable for renovations, new constructions, and projects where material and labor costs may vary. It provides a clear framework for managing additional expenses, ensuring both parties understand their rights and obligations.
Who needs this form
- Property owners looking to hire a contractor for construction work.
- Contractors who prefer cost plus or fixed fee arrangements.
- Individuals involved in managing construction agreements in Virginia.
- Anyone needing a structured contract to outline responsibilities and expectations in a construction project.
Instructions for completing this form
- Identify and enter the names and contact information of the contractor and the property owner.
- Specify the work site address and brief description of the project scope.
- Outline any permits required for the project and who will be responsible for obtaining them.
- Detail the payment terms, including whether the agreement will be cost plus or fixed fee.
- Include provisions for change orders and conditions regarding soil responsibility.
- Both parties should sign and date the contract to finalize the agreement.
Notarization requirements for this form
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
- Not specifying the work site clearly, leading to disputes.
- Failing to include terms for change orders, resulting in unexpected costs.
- Overlooking insurance requirements, which can lead to liability issues.
- Not detailing the payment method and schedule, causing confusion about financial responsibilities.
Why use this form online
- Convenience of downloading and filling out the form at your own pace.
- Ability to customize the template to fit specific project needs.
- Access to legally vetted documents prepared by licensed attorneys.
- Secure storage and easy retrieval of documents when needed.
Form popularity
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 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.
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%.
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.
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.
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.
