This form is a Construction Contract that may be executed with either a cost plus or fixed fee payment arrangement. The form contains the following additional subject matters and complies with the laws of the State of Arizona: scope of work, work site, warranty and insurance.
Surprise Arizona Construction Contract Cost Plus or Fixed Fee: A construction contract is a legally binding agreement between a property owner and a contractor for the completion of a construction project. In Surprise, Arizona, there are two common types of construction contracts: Cost Plus and Fixed Fee. Each type has its own unique characteristics and is suited for different project requirements. 1. Cost Plus Contract: A Cost Plus contract is an agreement where the property owner pays the actual cost of construction plus an additional fee to the contractor. The total cost includes the direct expenses incurred during construction, such as labor, materials, equipment, and subcontractor costs. There are three subtypes of Cost Plus contracts commonly used in Surprise, Arizona: a. Cost Plus Fixed Percentage: In this subtype, the contractor charges a fixed percentage fee on top of the actual project costs. Both parties agree on the percentage upfront, usually based on the complexity and scope of the project. For example, if the contractor's fee is set at 10% and the total construction costs amount to $100,000, the property owner would pay an additional $10,000 as the contractor's fee. b. Cost Plus Fee Negotiated: Under this subtype, the contractor and property owner negotiate a fixed fee based on project requirements. The fee is determined through mutual agreement, taking into consideration factors such as complexity, scope, and potential risks involved in the construction project. This type offers more flexibility for negotiation compared to the fixed percentage method. c. Cost Plus with Guaranteed Maximum Price (GMP): This subtype of Cost Plus contract sets a maximum limit on the overall project cost. The contractor is responsible for completing the project under the established maximum price, ensuring cost control. If the actual costs exceed the guaranteed maximum price, the contractor bears the additional expenses. Conversely, if the costs are less than the guaranteed maximum price, the property owner benefits from cost savings. 2. Fixed Fee Contract: A Fixed Fee contract, also known as a Lump Sum contract, is an agreement where the property owner pays a predetermined fixed fee for the completion of the construction project. Unlike the Cost Plus contract, the property owner is not involved in the direct expenses of the project. The contractor estimates the total cost and risks associated with the project, including labor, materials, subcontractors, and overheads. The determined fee is based on this estimation and covers all costs incurred during the construction process. This type of contract provides a clear and predictable cost structure for the property owner. In Surprise, Arizona, construction projects may use either the Cost Plus or Fixed Fee contract based on their specific requirements and the preferences of the property owner and the contractor. Contractors often suggest the appropriate type of contract based on factors such as project size, complexity, timeframe, and budget constraints. It is crucial for property owners to carefully review and understand the terms and conditions stated in the contract before signing, ensuring a successful and cost-effective construction project.Surprise Arizona Construction Contract Cost Plus or Fixed Fee: A construction contract is a legally binding agreement between a property owner and a contractor for the completion of a construction project. In Surprise, Arizona, there are two common types of construction contracts: Cost Plus and Fixed Fee. Each type has its own unique characteristics and is suited for different project requirements. 1. Cost Plus Contract: A Cost Plus contract is an agreement where the property owner pays the actual cost of construction plus an additional fee to the contractor. The total cost includes the direct expenses incurred during construction, such as labor, materials, equipment, and subcontractor costs. There are three subtypes of Cost Plus contracts commonly used in Surprise, Arizona: a. Cost Plus Fixed Percentage: In this subtype, the contractor charges a fixed percentage fee on top of the actual project costs. Both parties agree on the percentage upfront, usually based on the complexity and scope of the project. For example, if the contractor's fee is set at 10% and the total construction costs amount to $100,000, the property owner would pay an additional $10,000 as the contractor's fee. b. Cost Plus Fee Negotiated: Under this subtype, the contractor and property owner negotiate a fixed fee based on project requirements. The fee is determined through mutual agreement, taking into consideration factors such as complexity, scope, and potential risks involved in the construction project. This type offers more flexibility for negotiation compared to the fixed percentage method. c. Cost Plus with Guaranteed Maximum Price (GMP): This subtype of Cost Plus contract sets a maximum limit on the overall project cost. The contractor is responsible for completing the project under the established maximum price, ensuring cost control. If the actual costs exceed the guaranteed maximum price, the contractor bears the additional expenses. Conversely, if the costs are less than the guaranteed maximum price, the property owner benefits from cost savings. 2. Fixed Fee Contract: A Fixed Fee contract, also known as a Lump Sum contract, is an agreement where the property owner pays a predetermined fixed fee for the completion of the construction project. Unlike the Cost Plus contract, the property owner is not involved in the direct expenses of the project. The contractor estimates the total cost and risks associated with the project, including labor, materials, subcontractors, and overheads. The determined fee is based on this estimation and covers all costs incurred during the construction process. This type of contract provides a clear and predictable cost structure for the property owner. In Surprise, Arizona, construction projects may use either the Cost Plus or Fixed Fee contract based on their specific requirements and the preferences of the property owner and the contractor. Contractors often suggest the appropriate type of contract based on factors such as project size, complexity, timeframe, and budget constraints. It is crucial for property owners to carefully review and understand the terms and conditions stated in the contract before signing, ensuring a successful and cost-effective construction project.
