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Below are a few types of cost-reimbursable contracts: Cost Plus Fee (CPF) or Cost Plus Percentage of Costs (CPPC) ... Cost Plus Fixed Fee (CPFF) ... Cost Plus Incentive Fee (CPIF) ... Cost Plus Award Fee (CPAF)
Other contract types include incentive contracts, time-and-materials, labor-hour contracts, indefinite-delivery contracts, and letter contracts.
Cost-plus contracts are generally used if the party drawing up the contract has budgetary restrictions or if the overall scope of the work can't 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.
There are four general types of cost-reimbursement contracts, all of which pay every allowable, allocatable, and reasonable cost incurred by the contractor, plus a fee or profit which differs by contract type.
Although there is no industry standard, the "plus" part of cost-plus contracts is usually in the range of 10 to 20 percent of the project's total cost.
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People also ask

Markups vary from one contractor to the next and possibly from one project to the next. But as a general guide, the typical markup on materials will be between 7.5 and 10%. However, some contractors will mark up materials as much as 20 percent, according to the Corporate Finance Institute.
Disadvantages of cost-plus fixed-fee contracts may include: The final, overall cost may not be very clear at the beginning of negotiations. May require additional administration or oversight of the project to ensure that the contractor is factoring in the various cost factors.
What Is a Cost-Plus Contract? A cost-plus contract is one in which the contractor is paid for all of a project's expenses plus an additional fee for the job. The additional fee is intended to be the contractor's profit.
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.
Cost Plus Contract Disadvantages For the buyer, the major disadvantage of this type of contract is the risk for paying much more than expected on materials. The contractor also has less incentive to be efficient since they will profit either way.

cost plus contract pdf