Construction Cost Plus Contract Template for New Zealand

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Key Requirements PROMPT example:

Construction Cost Plus Contract

"I need a Construction Cost Plus Contract for a commercial building renovation in Auckland, with work starting March 2025, including standard cost-plus terms with a 12% markup and monthly reporting requirements."

Document background
The Construction Cost Plus Contract is particularly suitable for New Zealand construction projects where the scope of work cannot be fully defined at the outset, or where flexibility is required due to project complexity or uncertainty. This contract type is commonly used in urgent projects, renovation works where the full extent of work is unknown until construction begins, or projects with significant potential for variations. The document complies with New Zealand construction law, including the Construction Contracts Act 2002 and Building Act 2004, and includes comprehensive provisions for cost reporting, validation of expenses, markup calculations, and project management procedures. It provides transparency in cost allocation while protecting both parties' interests through clear definition of allowable costs, reporting requirements, and audit rights. The contract is structured to ensure fair risk allocation and clear procedures for managing changes, while maintaining the flexibility inherent in cost-plus arrangements.
Suggested Sections

1. Parties: Identification of the Principal/Client and the Contractor, including their legal details and representatives

2. Background: Context of the agreement, project overview, and basis for entering into the contract

3. Definitions and Interpretation: Definitions of key terms and rules for interpreting the contract

4. Scope of Works: Detailed description of the construction works to be performed

5. Cost Plus Mechanism: Definition of cost components, markup/fee structure, and allowable expenses

6. Contractor's Obligations: Key responsibilities including work quality, reporting, record-keeping, and cost management

7. Principal's Obligations: Client responsibilities including site access, information provision, and timely decisions

8. Cost Reporting and Transparency: Requirements for regular cost reporting, open-book accounting, and audit rights

9. Payment Terms: Payment process, timing, documentation requirements as per Construction Contracts Act

10. Variations: Process for managing changes to scope, costs, or time

11. Time and Programme: Project timeline, milestones, and management of delays

12. Quality and Compliance: Quality standards, inspections, and compliance with Building Code and regulations

13. Health and Safety: HSE requirements and responsibilities under Health and Safety at Work Act

14. Insurance and Liability: Required insurances and allocation of risks

15. Dispute Resolution: Process for resolving disputes as per Construction Contracts Act

16. Termination: Grounds and process for contract termination

17. General Provisions: Standard contractual terms including notices, assignment, and governing law

Optional Sections

1. Performance Security: Requirements for bonds or guarantees, used for higher-value projects

2. Value Management: Procedures for cost optimization and value engineering, useful for complex projects

3. Subcontractor Management: Specific requirements for managing subcontractors, relevant for larger projects

4. Environmental Management: Environmental obligations and compliance, important for environmentally sensitive projects

5. Provisional Sums: Management of provisional sum items, used when certain costs cannot be determined initially

6. Intellectual Property: IP rights and obligations, relevant when design or innovative methods are involved

7. Building Information Modeling: BIM requirements and protocols, for projects using BIM

8. Defects Liability Period: Extended defects coverage, important for larger or complex buildings

Suggested Schedules

1. Schedule 1: Scope of Works: Detailed specifications, drawings, and technical requirements

2. Schedule 2: Cost Components: Breakdown of cost categories, mark-up rates, and fee calculation method

3. Schedule 3: Key Personnel: Details of key staff from both parties and their roles

4. Schedule 4: Programme: Detailed project timeline and milestones

5. Schedule 5: Site Information: Site details, access requirements, and known site conditions

6. Schedule 6: Insurance Requirements: Specific insurance types and coverage levels required

7. Schedule 7: Forms and Procedures: Standard forms for variations, payment claims, and other processes

8. Schedule 8: Special Conditions: Any project-specific requirements or variations to standard terms

9. Appendix A: Drawings: Construction drawings and design documents

10. Appendix B: Reports: Relevant technical reports, surveys, and investigations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Relevant Industries

Construction

Property Development

Real Estate

Infrastructure

Commercial Building

Residential Development

Industrial Construction

Public Works

Healthcare Construction

Education Construction

Relevant Teams

Legal

Construction

Commercial

Finance

Operations

Procurement

Risk Management

Project Management

Contract Administration

Business Development

Relevant Roles

Construction Manager

Project Manager

Contract Administrator

Quantity Surveyor

Commercial Manager

Construction Director

Legal Counsel

Risk Manager

Cost Controller

Chief Financial Officer

Development Manager

Site Manager

Procurement Manager

Operations Director

Client Representative

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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