Cost plus contract
A detailed legal agreement where the owner reimburses the contractor for all construction-related expenses plus an additional amount (either a percentage of the full contract price or a fixed fee) to cover the contractor's overhead and profit.
A cost plus contract reimburses the contractor for actual costs incurred, plus a fee for profit. This type of contract provides flexibility in scope but requires detailed documentation of expenses and can lead to higher project costs if not carefully managed. It is often used when project scope is uncertain or changes frequently.
Used in a sentence
In a cost plus contract, the contractor is reimbursed for costs plus an agreed-upon fee.
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