Cost plus contracts

What is a cost plus contract

Cost plus is a contract form suited to circumstances where there is insufficient detail at the commencement of work for a final cost to be calculated.

‘A cost plus contract is a contract where a contractor obtains material and services throughout the stages of the building process and costs are passed to the owners, with an agreed margin to cover overheads and profits. The hourly rates of the contractor’s labour are usually agreed upon. The contractor may make claims, inclusive of its margins at intervals that are agreed between parties. These claims are often monthly or linked to milestones’ (Source: Morrissey and Wen, 2018).