Description

What is it?

A cost plus contract is where additional fees are charged to the owner for supervision, overheads and profit. This is usually because builder obtains material and services throughout the stages of the building process and costs are passed to the owners. There may be a component with an agreed margin to cover overheads and profits. The hourly rates of the contractor’s labour are usually agreed upon.

Payment is often linked to a monthly cycle or milestones. The Fee may be represented as a Fixed amount plus a percentage of the Actual Cost, or a fixed fee.

A contract between two parties which is not a lump sum ‘fixed price’ contract. Costs are totalled and a percentage or fixed sum added for administration, supervision and profit.

When is it used?

This contract can be used for both residential and commercial projects.

Does the Home Building Contract Act apply?

Cost plus contracts are exempt from most provisions of the Home Building Contract Act. This contract complies to the extent required by the Act, particularly the requirement to arrange home indemnity insurance for residential projects.

Who should use this contract?

The contract is directly between builder and owner and does NOT provide for an architect or superintendent providing administration on the owner’s behalf.

Note: Cost plus contracts are exempt from most provisions of the Home Building Contract Act.

Minimum Purchase 2 – One for Builder, one for Owner