This form is a Construction Contract that may be executed with either a cost plus or fixed fee payment arrangement. The form contains the following additional subject matters and complies with the laws of the State of California: scope of work, work site, warranty and insurance.
Modesto California Construction Home Improvement Contract Cost Plus or Fixed Fee
Category:
State:
California
City:
Modesto
Control #:
CA-00462
Format:
Word;
Rich Text
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Description
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FAQ
Budget: A fixed-price contract is just that: fixed. The agreed-on price at the beginning of the project is the price at the end. Conversely, a cost-plus contract estimates a project's costs but doesn't set the final price until the project is completed.
Unlike a fixed-cost construction contract, a cost-plus construction agreement is a contract in which the owner pays the contractor the actual costs of the materials and labor plus an additional negotiated fee or percentage over that amount.
Cost-plus pricing is also known as markup pricing. It's a pricing method where a fixed percentage is added on top of the cost it takes to produce one unit of a product (unit cost). The resulting number is the selling price of the product.
Cost-Plus-Fixed-Fee Contracts estimated cost and fee for production and delivery of designs, plans, drawings, and specifications shall not exceed 6 percent of the estimated cost of construction of the public work or utility, excluding fees.
Expenses may also include overhead, like research and development costs necessary to meet contractual goals. However, estimating errors, mistakes and costs incurred due to negligence are not covered in most cost-plus contracts. In some cases, the customer may request a cap on total chargeable expenses.
Cost-plus percentage of cost is a method contractors often use to price services. This type of contract specifies that the buyer must pay all the project costs incurred by the seller, plus an additional amount for profit.
plus contract is one in which the contractor is paid for all of a project's expenses plus an additional fee for the job.
The specific contract types range from firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed.
A CPPC contract is one that is structured to pay the contractor his actual costs incurred on the contract plus a fixed percent for profit or overhead (that is not audited/adjusted) and which is applied to actual costs incurred.
Lump Sum (Fixed Price) Contract Under a fixed price contract the builder agrees to bear any costs above the fixed price, except for those costs incurred because of variations requested by the client or matters outside the control of the builder, such as a fire, war, strike or natural disaster.
