Cost-Plus Contract
Definition
A cost-plus contract is a construction agreement where the homeowner pays the actual cost of labor, materials, and subcontractor services plus an agreed-upon markup percentage (usually 15-25%) covering the contractor's overhead and profit. Receipts and invoices are shared openly with the homeowner.
Common Questions
Real-World Example
You'd see this when a homeowner in Camas, WA undertakes a complex 1940s home restoration — CRM Services proposes a cost-plus contract with a 20% markup and a not-to-exceed ceiling, allowing flexibility to handle hidden-condition issues as they're discovered.
Why It Matters
Cost-plus contracts are one of several pricing models CRM Services offers, typically reserved for complex projects with significant unknown scope.
Related Services
Related Terms
Time and materials (T&M) charges based on actual hours and materials used. Fixed price charges a sin...
Subcontractor markup is the percentage a general contractor adds to a subcontractor's bid to cover c...
Material markup is the percentage added to material costs before charging the client, covering sourc...
Overhead and profit (O&P) is the combined percentage added to estimates to cover indirect business c...