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When would a cost-plus fee contract normally be used?

Cost-plus contracts are generally used if the party drawing up the contract has budgetary restrictions or if the overall scope of the work cant 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.

What is a cost-plus contract in construction?

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.

What is a cost-plus percentage of cost contract in construction?

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.

What is a construction contract price?

The construction contract price includes the direct project cost including field supervision expenses plus the markup imposed by contractors for general overhead expenses and profit. The factors influencing a facility price will vary by type of facility and location as well.

What does cost-plus 10% mean?

Cost plus is about as simple as it sounds. Retailers set shelf pricing for every item in the store at their cost the item, transportation and warehousing costs and labor to get it on the shelf and simply charge consumers 10% of their total basket at checkout.

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