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Cost Plus Construction Contract

Clearly define costs, fees, and responsibilities with this Cost Plus Construction Contract Template.

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Cost Plus Construction Contract

Cost Plus Construction Contract Template


This Cost Plus Construction Contract (“Agreement”) is entered into on [Date], by and between:

Owner: [Full Legal Name]
Address: [Address]
Contact: [Phone, Email]

Contractor: [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]

Together referred to as the “Parties.”


1. Project Description

The Contractor agrees to provide construction services for the following project:
[Describe project details, property address, and scope of work].


2. Contract Price and Payment Terms

  • The Owner agrees to reimburse the Contractor for actual, documented costs of labor, materials, equipment, and subcontractors.

  • In addition, the Owner shall pay the Contractor a fee of:
    ☐ [X]% of total costs, or
    ☐ A fixed fee of $[Amount].

  • Payment shall be made on a [weekly/monthly] basis, upon submission of invoices and receipts.


3. Records and Documentation

The Contractor shall maintain accurate records of all costs incurred. The Owner has the right to audit such records upon reasonable notice.


4. Maximum Price (Optional)

The Parties agree to a maximum project cost of $[Amount]. The Contractor shall not exceed this limit without prior written approval from the Owner.


5. Project Timeline

  • Start Date: [Date]

  • Estimated Completion Date: [Date]

  • Delays caused by weather, unforeseen conditions, or Owner-requested changes may extend the timeline.


6. Change Orders

All changes to the scope of work must be documented in a written Change Order signed by both Parties, including any adjustments to costs or timelines.


7. Warranties

The Contractor warrants that all work will be completed in a professional and workmanlike manner and shall comply with applicable building codes and standards.


8. Insurance and Liability

  • Contractor shall maintain general liability insurance, workers’ compensation, and any other required coverage.

  • Contractor shall indemnify and hold harmless the Owner from claims arising from Contractor’s negligence or non-compliance.


9. Termination

  • Either Party may terminate this Agreement with [X days] written notice.

  • The Owner shall pay for all costs incurred and fees earned up to the termination date.


10. Governing Law

This Agreement shall be governed by the laws of [State/Country].


11. Entire Agreement

This document represents the entire understanding between the Parties and supersedes prior discussions.


Signatures

Owner: ____________________________ Date: _________
Name: ___________________________________________

Contractor: ________________________ Date: _________
Name/Title: ________________________________________

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Cost Plus Construction Contract

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For quick answers, scroll below to see the FAQ.

COST PLUS CONSTRUCTION CONTRACT FAQ


What is a Cost Plus Construction Contract?

A Cost Plus Construction Contract is an agreement where the property owner pays the contractor for actual construction costs—including labor, materials, and overhead—plus an additional fee or percentage for profit.


Why is a Cost Plus Construction Contract important?

It provides transparency in project expenses, ensures contractors are fairly compensated, and allows flexibility when project scope or costs cannot be fully estimated upfront.


When should you use a Cost Plus Construction Contract?

Use this agreement for projects where costs may vary significantly due to complexity, design changes, or uncertain conditions. It is often applied in large-scale residential or commercial construction.


What should a Cost Plus Construction Contract include?

It should include reimbursement rules, contractor’s fee structure, payment terms, recordkeeping requirements, timelines, change order procedures, warranties, and termination conditions.


What are the risks of a Cost Plus Construction Contract?

The owner bears greater cost risk since the final price is not fixed, but safeguards such as cost caps, detailed reporting, and audit rights can reduce uncertainty.


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