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 Colorado: scope of work, work site, warranty and insurance.
Fort Collins Colorado Construction Contract Cost Plus or Fixed Fee
Category:
State:
Colorado
City:
Fort Collins
Control #:
CO-00462
Format:
Word;
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How to fill out Colorado Construction Contract Cost Plus Or Fixed Fee?
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FAQ
Cost-plus contracts are generally used if the party drawing up the contract has budgetary restrictions or if the overall scope of the work can't be properly estimated in advance. In construction, cost-plus contracts are drawn up so contractors can be reimbursed for almost every expense actually incurred on a project.
fixedprice contract provides for a price that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.
A: As an example, a cost-plus contract may establish that the total estimated cost of a building project is $10 million plus a fixed fee of $1.5 million, roughly 15% of the total cost, as the contractor's profit. So the total expense to the buyer would be approximately $11.5 million ?the cost plus the fee.
plusfixedfee contract is a costreimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract.
Cost plus fixed fee contracts can be used when both the contractor and the owner agree that the contractor is entitled to a fee in addition to the project expenses.
Cost-plus contracts are majorly found in the construction industry where the contractor is reimbursed the number of expenditures made for the contract and fixed percentage fees of the contract cost as the profit made on the contract.
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.
Fixed-Price Contract vs Cost Plus Contract The Cost-Plus Contract price is not fixed and the Builder only has to give the Owner a reasonable estimate of the works. The estimate is ascertained by adding a profit margin to the actual cost of direct materials, labour and expenses.
Cost Plus Contract Advantages Higher quality since the contractor has incentive to use the best labor and materials. Less chance of having the project overbid. Often less expensive than a fixed-price contract since contractors don't need to charge a higher price to cover the risk of a higher materials cost than
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.