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Cost plus agreement sample

Construction Contract Cost Plus or Fixed Fee - Virginia 2026

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This document is a Construction Contract between a Contractor and an Owner, outlining the terms and conditions for the construction of a project. It details the scope of work, time of completion, payment structure, responsibilities regarding permits and soil conditions, insurance requirements, procedures for changes to the scope of work, and provisions for late payments and damages. The contract emphasizes that any modifications must be documented in writing and establishes legal governance under Virginia law.

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Click ‘Get Form’ to open it 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 specifies who is hiring the Contractor for the project.
In the 'SCOPE OF WORK' section, describe the project details, including labor and materials required. Be specific about drawings and specifications.
Fill in the 'WORK SITE' information with the property location where construction will take place.
Specify dates for 'TIME OF COMPLETION' to outline when work will start and when it should be completed.
Indicate whether you are using a 'COST PLUS' or 'FIXED FEE' payment structure in the 'CONTRACT PRICE' section, and provide relevant amounts.
Review all sections for accuracy before signing. Ensure both parties sign and date at the end of the document.

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What is the difference between cost-plus and fixed cost?

A cost plus contract guarantees profit for the contractor. It is stated in the contract that the contractor will be reimbursed for all costs and still generate a profit. Conversely, a fixed price contract establishes a projects price beforehand.

What are the advantages of 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.

When to use cost-plus fixed fee?

This contract is often used when the scope of the work cannot be precisely defined at the time of the agreement, and there are doubts about potential changes and variations in the course of the project. In a CPFF contract, the buyer agrees to reimburse the supplier for the allowable costs of the project.

When should you use a fixed-price contract?

A fixed-price contract with economic price adjustment may be used when (i) there is serious doubt concerning the stability of market or labor conditions that will exist during an extended period of contract performance, and (ii) contingencies that would otherwise be included in the contract price can be identified and

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

What are the advantages and disadvantages of a cost-plus 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.

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When should firms use cost plus pricing?

Cost-plus pricing is most appropriate in industries with stable, identifiable costs or when businesses want to ensure predictable profit margins. It can also be useful in less competitive markets where demand is relatively inelastic.

What is the percentage of cost-plus in construction contracts?

A CPPC contract is one that is structured to pay the contractor his actual costs incurred on the contract plus a fixed percent for profit or overhead (that is not audited/adjusted) and which is applied to actual costs incurred.