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Cost plus construction contract

Construction Contract Cost Plus or Fixed Fee - Arizona 2026

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This document is a construction contract between a Contractor and an Owner, outlining the terms and conditions for a construction project. It details the scope of work, time of completion, payment structure, responsibilities regarding permits and soil conditions, insurance requirements, and procedures for changes to the scope of work. The contract also includes provisions for late payments, destruction or damage to the project, assignment of the contract, and legal interpretations. Additionally, it provides information on warranties and rights related to cancellation of the contract.

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Click ‘Get Form’ to open the Construction Contract Cost Plus or Fixed Fee - Arizona in the editor.
Begin by filling in the Contractor's name and address at the top of the form. This identifies who will be performing the work.
Next, enter the Owner's name and address. This section is crucial as it specifies who is hiring the Contractor.
In the 'SCOPE OF WORK' section, provide a detailed description of the project, including drawings and specifications that outline what work will be done.
Specify the 'WORK SITE' by entering the property address where construction will take place. Ensure this matches any legal documents related to ownership.
Fill in the 'TIME OF COMPLETION' dates to establish when work will start and when it is expected to be completed.
Choose between 'COST PLUS' or 'FIXED FEE' payment structures and fill in relevant amounts for each option based on your agreement with the Contractor.
Review all sections for accuracy before saving your document. Utilize our platform’s features to sign and share your completed contract easily.

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What is a disadvantage of a cost-plus fixed-fee contract?

Cost plus construction contracts offer advantages like transparency, flexibility, and reduced contractor risk. They also come with drawbacks, including uncertain pricing, a higher administrative workload, and a greater risk of disputes.

When to use cost-plus fixed-fee?

A cost-plus contract reimburses contractors for project costs plus either a percentage or fixed fee, which they take as profit. This type of contract is favored by contractors because of the flexibility they offer. This makes them ideal for projects where the scope is unclear and subject to change.

What percentage do contractors charge for cost-plus?

Most contracts have a cost-plus fee scale of 10-25%. A contractor would use takeoff software to calculate the materials costs, but they wouldnt need to be exact. Some companies use a cost-plus-fixed-fee (CPFF) instead of a percentage.

When to use a cost-plus fixed fee contract?

These contracts are commonly used in research, development, and technical service projects, where precise costs are difficult to estimate in advance.

When would you use a cost-plus contract?

Construction project owners may employ this type of contract when they want to get a project moving quickly or when the scope of work is unclear, making it difficult to estimate the total cost. That said, the total price for a cost-plus contract may ultimately be higher than it would be with other contract types.

cost plus construction contracts

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What is a standard cost-plus construction contract?

A cost-plus contract is a construction agreement that requires reimbursement for project costs as well as a markup that covers the contractors overhead and profit. In other words, the name is a short-hand way of remembering what the contract covers: project costs plus contractor markup.

What are the disadvantages of a cost-plus fee contract?

Here are some of the disadvantages businesses should consider: Risk of cost overruns: Because the client agrees to reimburse all costs, theres a risk that the project will go over budget. If the contractor isnt managing expenses well, the client will end up paying the bill.

Which is an advantage of the cost-plus fixed-fee contract?

Benefits of a cost-plus fixed-fee contract They allow you to explore and adjust the scope, unlike firm-fixed-price contracts. CPFF contracts foster better communication between clients and contractors, especially when both parties must work closely to guarantee contract performance.