Kings New York Construction Contract Cost Plus or Fixed Fee is a legally-binding agreement between a client and a construction contractor in New York that outlines the terms and conditions regarding the cost estimation and payment structure for a construction project. This type of contract is commonly used in the construction industry to establish clarity and transparency regarding project costs. The two primary types of Kings New York Construction Contract Cost Plus or Fixed Fee are the Cost Plus contract and the Fixed Fee contract. Each of these contract types has distinct characteristics and suits different project scenarios. 1. Cost Plus Contract: A Cost Plus contract is an agreement where the contractor is reimbursed for the actual costs of labor, materials, and other project expenses, plus an additional fee based on a specified percentage or a predetermined arrangement. This type of contract is often used when the project scope or specifications are not well-defined, and there is a high probability of change orders or unforeseen circumstances. By allowing for flexibility in cost adjustments, this contract type ensures that the client pays for the actual expenses incurred during the construction process. Keywords: Kings New York Construction Contract, Cost Plus, reimbursement, labor, materials, project expenses, additional fee, change orders, unforeseen circumstances. 2. Fixed Fee Contract: A Fixed Fee contract is an agreement where the contractor charges a fixed sum, also known as a lump sum, for completing the construction project. The fee is determined based on the project's estimated costs, including labor, materials, overhead expenses, and the contractor's profit margin. This type of contract is commonly used when the project scope and specifications are well-defined and unlikely to undergo significant changes. The Fixed Fee contract provides the client with predictable project costs and minimizes the risk of cost overruns. Keywords: Kings New York Construction Contract, Fixed Fee, lump sum, estimated costs, labor, materials, overhead expenses, profit margin, project scope, cost overruns. In both contract types, it is essential to include specific provisions regarding project milestones, payment schedules, change order procedures, dispute resolution mechanisms, insurance requirements, and completion timelines to ensure a smooth construction process and mitigate any potential conflicts or delays. Overall, Kings New York Construction Contract Cost Plus or Fixed Fee is a crucial tool that provides a comprehensive framework for contractors and clients to agree on project costs and payment terms, promoting transparency and accountability in construction projects.
Kings New York Construction Contract Cost Plus or Fixed Fee
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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 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.
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.
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.
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.
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 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.
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 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.
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