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

A cost plus contract means that the price of construction is the costs plus an additional fee, normally designated as profit. The fixed costs include the cost of the materials and labor along with indirect costs known as overhead. It is simply an agreement to pay costs plus profit, all as defined in the contract.

What is a cost-plus contract example?

For example, a contractor may stipulate that the employer pays them a percentage of labor costs, on top of being compensated for the cost of labor itself. Cost-plus contracts are most successful when theyre specific, and theres no such thing as too much detail.

How do you calculate contract price?

Contract Price = {Actual quantity of the Goods accepted by the Government} x {Rate/Unit Price quoted in paragraph 1(a) above}.

What are the three basic ways of pricing a construction contract?

There are three basic types of pricing arrangements in construction contracts: (1) stipulated sum (also known as fixed price or lump sum), (2) cost plus (with or without a guaranteed maximum or not-to-exceed price), and (3) unit price.

What is a fixed-price type contract?

A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractors cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.

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