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What is cost-plus contract?

A cost-plus contract is an agreement made between a project owner and a contractor to reimburse the contractor for expenses incurred and to add a specific, additional payment for their profit. This profit is usually stated as a percentage of the contracts full price.

What is a standard cost-plus contract?

Typically, under this contract type, the amount the homeowner will have to pay will be the actual costs incurred by the contractor (e.g. the amount a building contractor pays for materials and to their subcontractors) plus a percentage of those costs, or an added fee, to cover the contractors overheads and profit.

What is a CCDC cost-plus contract?

Description. CCDC 3 2016 is a standard prime contract between Owner and prime Contractor to perform the required work on an actual-cost basis, plus a percentage or fixed fee which is applied to actual costs. Using the CCDC 3 2016: Cost Plus Contract Document requires using a Copyright Seal.

How to write a cost-plus contract?

What Should Be Included in a Cost-Plus Contract? Parties Involved. Identifies the client and contractor, establishing their roles in the construction project. Project Description. Scope of Work. Cost Reimbursement Terms. Payment Terms. Cost Limits. Documentation Requirements. Change Order Process.

What is a cost-plus example?

Cost-based (cost plus) - This method of pricing is based on calculating the cost of producing the item and then adding on the percentage profit required by the company. For example, if a cake costs 1 to make and the company wants to make a 50% profit, they will sell the cake for 1.50.