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 North Dakota: scope of work, work site, warranty and insurance.
Fargo North Dakota Construction Contract Cost Plus or Fixed Fee
Category:
State:
North Dakota
City:
Fargo
Control #:
ND-00462
Format:
Word;
Rich Text
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How to fill out North Dakota Construction Contract Cost Plus Or Fixed Fee?
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FAQ
What Is a Cost-Plus Contract? A cost-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 additional fee is intended to be the contractor's profit.
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.
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.
For these reason I recommend avoiding cost-plus contracts in most cases. They simply carry too many risks for the owner and few benefits. They often lead to cost overruns and disputes over money. It's better to nail down as many costs as possible before starting the job and get a fixed bid.
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.
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.
Cost plus percentage contract means that as the project costs increase, the fee also increases. This is not typically used because the contractor has no incentive to control costs. In fact, federal government agencies are prohibited from using this type of contract.
From Longman Business Dictionary ?fixed ?fee (also flat fee) countable a set amount paid for work or a service, that does not change with the time the work takes or the amount the service is usedQuebec doctors get a fixed fee for each medical service performed.
Cost Plus contract has its own advantages and disadvantages. This type of contract is used when you want to reduce the risks and have your expenses covered on a job. But here you won't get reimbursed for any and every expenses.