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 Texas: scope of work, work site, warranty and insurance.
In Fort Worth, Texas, the construction industry follows two common types of contracts: the Cost Plus and the Fixed Fee contracts. A Construction Contract Cost Plus, also known as a Cost Reimbursement contract, is an agreement between the contractor and the client where the total construction cost is determined by the actual costs incurred during the construction process. This type of contract typically includes the reimbursement of direct project expenses such as labor, materials, equipment, and subcontractor charges. Additionally, it may also include indirect costs such as general conditions, overhead, and profit margins. Under the Cost Plus contract, the contractor is usually compensated for their overhead and profit by adding a predetermined percentage or a fixed fee on top of the verified project costs. This ensures that the contractor is adequately compensated for their services while providing transparency to the client regarding the actual expenses involved in the construction project. The Cost Plus contract is often preferred in situations where the project scope is not well-defined or is expected to change significantly during construction. It offers flexibility by allowing adjustments to the project's design and scope as necessary, without the need for frequent contract amendments. On the other hand, the Fixed Fee construction contract, also known as the Lump Sum contract, follows a payment structure where the contractor agrees to undertake the construction project for a specified amount or lump sum. This fixed fee covers all expected costs, including labor, materials, equipment, subcontractor charges, overhead, and profit margins. The contractor assumes the risk of any cost overruns, providing the client with a set budget from the start. The Fixed Fee contract is commonly used when the project scope is well-defined, and the client seeks a predictable and predetermined total cost. It provides stability in terms of budgeting for the client, as they know the exact cost upfront and don't need to worry about any cost fluctuations during the construction process. Both the Cost Plus and Fixed Fee contracts have their advantages and disadvantages, which should be carefully considered based on the specific project requirements and circumstances. The choice between these contract types depends on factors such as the project scope, budget constraints, level of design completion, and the client's risk tolerance. Overall, by understanding and selecting the appropriate construction contract type, contractors and clients in Fort Worth, Texas can collaborate effectively, ensuring successful construction projects that satisfy both parties involved.
