Cost plus construction contract template 2025

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Percentage of cost: The contractor receives a markup equal to a certain percentage of the total project cost. This percentage fee can vary across projects and industries, but its typically set between 5 and 25 percent.
Many Cost-Plus Percentage Builders charge 20%30% for overhead costs. In the example above, if the cabinets come in 5K over budget and the plumbers come in 5K over budget, the client ends up spending an additional 12K the extra 2K being the builders fee.
A cost-plus contract is a pricing plan for a project or service. It requires the client or project owner to pay the contractor a predetermined profit margin along with the full project costs. This type of contract is the ideal choice for complex, long-term projects where the scope of work and final cost can change.
The profit in a cost-plus contract is typically set as a fixed amount or a fixed percentage of the projects total costs. The percentage typically ranges from 10% to 20% of the total cost of the project.
Cost plus percentage contracts are invoices that charges the cost of the materials plus a percentage of the total materials used. These are typically used for custom work and where the amount of materials needed is not readily estimated.

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Example of a Cost-Plus Contract Assume ABC Construction Corp. has a contract to build a $20 million office building, and the agreement states that costs cannot exceed $22 million. ABCs profit is agreed at 15% of the contracts full price, or $3 million.
For cost-plus contracts (where the client agrees to pay all costs, plus a specific percentage margin to the builder), a common practice is costs plus 15 to 20 per cent margin, although there are some contracts which include a margin as small as 5 per cent. The builders margin may also be a fixed amount.

cost plus contract construction template