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 Texas: scope of work, work site, warranty and insurance.
Killeen Texas Construction Contract Cost Plus or Fixed Fee
Category:
State:
Texas
City:
Killeen
Control #:
TX-00462
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Word;
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How to fill out Texas Construction Contract Cost Plus Or Fixed Fee?
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FAQ
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.
Budget: A fixed-price contract is just that: fixed. The agreed-on price at the beginning of the project is the price at the end. Conversely, a cost-plus contract estimates a project's costs but doesn't set the final price until the project is completed.
Types Cost plus fixed-fee (CPFF) contracts pay costs plus a pre-determined fee that was agreed upon at the time of contract formation. Cost-plus-incentive fee (CPIF) contracts have a larger fee awarded for contracts which meet or exceed certain performance goals, for example being on schedule and any cost savings.
plusfixedfee contract is a costreimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract.
Cost-plus contracts are majorly found in the construction industry where the contractor is reimbursed the number of expenditures made for the contract and fixed percentage fees of the contract cost as the profit made on the contract.
When the parties are proactive in the formation and negotiation of the agreement, the cost-plus contract can be a beneficial contract for both parties.
Cost Plus Fixed Fee ? Contractor compensation is based on a fixed sum independent of the final project cost. The customer agrees to reimburse the contractor's actual costs, regardless of amount, and in addition pay a negotiated fee independent of the amount of the actual costs.
A: As an example, a cost-plus contract may establish that the total estimated cost of a building project is $10 million plus a fixed fee of $1.5 million, roughly 15% of the total cost, as the contractor's profit. So the total expense to the buyer would be approximately $11.5 million ?the cost plus the fee.
Budget: A fixed-price contract is just that: fixed. The agreed-on price at the beginning of the project is the price at the end. Conversely, a cost-plus contract estimates a project's costs but doesn't set the final price until the project is completed.
For these reason I recommend avoiding cost-plus contracts in most cases. They simply carry too many risks for the owner and few benefits. They often lead to cost overruns and disputes over money. It's better to nail down as many costs as possible before starting the job and get a fixed bid.