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.
A New Mexico Home Improvement or Remodeling Construction Contract on a Cost Plus Basis of Payment is an agreement between a homeowner and a construction contractor, specifying the terms and conditions for a construction project. This type of contract is designed to accommodate flexible pricing arrangements and is commonly used when the final costs of a project are uncertain. Several types of contracts fall under the category of a Cost Plus Basis of Payment, including: 1. Fixed Fee Cost Plus Contract: This contract involves a pre-determined fixed fee agreed upon between the homeowner and contractor. The contractor is then reimbursed for all project-related expenses, including labor, materials, and subcontractor costs, in addition to the fixed fee. 2. Percentage-Based Cost Plus Contract: In this contract, the contractor is compensated based on a percentage of the total project cost. The percentage is negotiated and agreed upon beforehand. Similar to the Fixed Fee Cost Plus Contract, the contractor is reimbursed for all actual expenses incurred during the project. 3. Guaranteed Maximum Price (GMP) Cost Plus Contract: This contract establishes a maximum limit for the overall project cost, protecting the homeowner from excessive expenses. The contractor is paid for all actual costs, including labor, materials, and subcontractors, up to the agreed maximum price. If the project cost exceeds the GMP, the contractor is responsible for covering the difference. A comprehensive New Mexico Home Improvement or Remodeling Construction Contract on a Cost Plus Basis of Payment typically includes the following elements: 1. Project Details: The contract should clearly outline the scope of work, including specific tasks, materials, and any special requirements for the project. 2. Cost Breakdown: It is essential to provide a detailed breakdown of anticipated costs, such as labor, materials, subcontractors, permits, taxes, and any additional expenses. 3. Payment Terms: This section explains the terms and conditions for payment, including the frequency of invoice submission and payment, as well as any deposit or down payment requirements. 4. Change Orders: A provision should be included to address modifications or changes requested by the homeowner during the project, including a process for approving and documenting change orders. 5. Project Timeline: A timeline outlining key milestones and deadlines ensures both parties are aware of the expected duration of the project. 6. Insurance and Liability: The contract should clearly define the insurance coverage required for the project and allocate responsibility for any damages or injuries that may occur. 7. Dispute Resolution: It is essential to include a section addressing dispute resolution methods, such as mediation or arbitration, to ensure conflicts are resolved efficiently and fairly. By utilizing a New Mexico Home Improvement or Remodeling Construction Contract on a Cost Plus Basis of Payment, homeowners can have greater control over their project costs and ensure transparency throughout the construction process.
