What Is a Cost-Plus Contract?

A cost-plus contract refers to a construction contract where the two parties only agree on the basis of the contract's allowable or otherwise agreed costs, plus a certain percentage or fixed cost of the project.

Cost-plus contract

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A cost-plus contract refers to a construction contract where the two parties only agree on the basis of the contract's allowable or otherwise agreed costs, plus a certain percentage or fixed cost of the project.

The cost-plus contract means that when the contract is signed, the two parties only agree on the quality of the project, and the contractor can only do as required by the contracting party. As for the price problem, the contracting party will settle the market with the follow-up, how much will be reimbursed, and when the raw material price rises, the contractor will Do nt worry, it will be borne by the contractor. The contractor is settled at a fixed profit rate, and the price increase will be absorbed by the contractor. Therefore, the risk of the cost-plus contract is borne by the contracting party.

Cost plus contracts can be further subdivided into cost plus cost percentage contracts, cost plus fixed fee contracts, cost plus remuneration contracts, and cost plus bonus contracts.

Refers to a construction contract that is based on a contract-allowed or otherwise negotiated cost, plus a certain percentage of that cost or a fixed cost to determine the project price. That is, when the contract is signed, the two parties only agree on the quality of the project, and the contractor only needs to do as required by the contractor. As for the price problem, the contractor will settle the market with the follow-up, and how much will be reimbursed. When the price of raw materials increases, the contractor will not worry, anyway Supported by the contractor, the contractor is settled at a fixed profit rate, and the price increase is partially absorbed by the contractor. Therefore, the risk of the cost plus contract is borne by the contractor.