A cost-plus contract is one in which the purchaser agrees to pay the cost of all labor and materials plus an amount for contractor overhead and profit (usually as a percentage of the labor and material cost). This type of contract is often used when the scope of the work is undermined or highly uncertain and the kinds of labor, material and equipment needed are also uncertain. It is important that the contractor maintain complete records of all time and materials spent by the contractor on the work.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
Maine Home Improvement or Remodeling Construction Contract — Cost Plus Basis of Payment is a legally binding agreement between a homeowner and a contractor for renovation or construction work on a property in Maine. This contract type outlines the terms and conditions related to the cost estimation and payment structure. The Cost Plus Basis of Payment contract is a popular choice for many homeowners and contractors in Maine as it provides transparency and allows for flexibility during the project. Instead of a fixed price, this contract type states that the homeowner will pay the actual cost of materials, labor, and subcontractors plus an agreed-upon percentage or fee to the contractor. The contract should include a detailed scope of work, which outlines the specific remodeling or improvement works to be performed, including any permits or inspections required. It is essential to include a timeline for completion, specifying start and end dates, to ensure both parties are aware of project expectations. There are various types of Maine Home Improvement or Remodeling Construction Contract — Cost Plus Basis of Payment, each tailored to specific project requirements: 1. Cost-Plus-Fixed-Fee Contract: This type adds a fixed fee or percentage on top of the actual project costs. The contractor is responsible for accurately tracking and documenting all expenses, including receipts and invoices. 2. Cost-Plus-Percentage Contract: In this agreement, the contractor's fee is calculated as a percentage of the total project cost. A typical percentage might be around 10-20% of the total costs. However, it's crucial to determine an upper limit for this percentage to avoid excessive charges. 3. Cost-Plus-Incentive Contract: This contract incorporates an incentive for the contractor to complete the project within a specified timeframe or below a predetermined budget. The incentive could be a bonus or increased fee percentage if the project is finished ahead of schedule or under budget. 4. Cost-Plus-Guaranteed-Maximum-Price (GMP) Contract: This contract agreement establishes a maximum limit on the overall cost of the project. If the actual costs exceed the agreed-upon maximum price, the contractor is responsible for covering the additional expenses. However, any savings achieved below the set maximum price can be shared between the homeowner and contractor. Regardless of the specific contract type, it is essential for both parties to carefully review and understand the terms and conditions before signing. Consulting with a legal professional or construction expert can ensure that all necessary elements are included and that both parties are adequately protected throughout the remodeling or improvement project.
