Cost Plus Construction Agreement Template for United States

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Key Requirements PROMPT example:

Cost Plus Construction Agreement

"I need a Cost Plus Construction Agreement for a new hospital development project starting in March 2025, with specific provisions for medical facility compliance and phased completion across multiple buildings, including a 12% contractor fee."

Document background
The Cost Plus Construction Agreement is designed for construction projects in the United States where traditional fixed-price contracts may not be suitable due to project complexity or uncertainty. This agreement type provides flexibility by allowing the contractor to be reimbursed for actual costs while earning a predetermined fee or percentage markup. It's particularly valuable for complex projects, renovations, or situations requiring fast-tracking where complete specifications aren't available at project start. The document must comply with both federal construction regulations and state-specific requirements, including licensing, insurance, and lien laws. It typically includes detailed cost tracking mechanisms, audit rights, and project management procedures to ensure transparency and control.
Suggested Sections

1. Parties: Identification and details of the Owner and Contractor

2. Background: Context of the agreement and basic project information

3. Definitions: Key terms used throughout the agreement

4. Scope of Work: Detailed description of construction services to be provided

5. Cost Plus Fee Structure: Definition of costs and calculation of contractor's fee

6. Payment Terms: Payment schedule, invoicing requirements, and payment procedures

7. Project Timeline: Construction schedule, milestones, and completion dates

8. Changes and Change Orders: Procedures for modifications to scope, cost, or timeline

9. Insurance and Indemnification: Required insurance coverage and indemnification obligations

10. Termination: Conditions and procedures for contract termination

Optional Sections

1. Performance Bonds: Bond requirements for larger projects or when required by law

2. Liquidated Damages: Predetermined damages for delay or non-performance when specific completion dates are critical

3. Dispute Resolution: Mediation and arbitration procedures when parties prefer alternative dispute resolution

4. Environmental Compliance: Specific environmental requirements for projects with significant environmental impact

Suggested Schedules

1. Schedule A - Project Specifications: Detailed technical specifications and drawings

2. Schedule B - Cost Schedule: Breakdown of allowable costs and markup calculations

3. Schedule C - Project Timeline: Detailed construction schedule and milestones

4. Schedule D - Insurance Requirements: Specific insurance coverage requirements and limits

5. Schedule E - Key Personnel: List of key project personnel and their roles

6. Schedule F - Forms and Procedures: Standard forms for change orders, progress payments, etc.

7. Schedule G - Subcontractor Requirements: Requirements and procedures for subcontractor engagement

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
Industries

Federal Contract Common Law: Basic principles governing contract formation, performance, and enforcement in the United States legal system

Davis-Bacon Act: Federal law requiring payment of prevailing wages on federally funded construction projects

Fair Labor Standards Act (FLSA): Federal law establishing minimum wage, overtime pay, recordkeeping, and child labor standards

OSHA Regulations: Occupational Safety and Health Administration standards ensuring safe working conditions in construction

Americans with Disabilities Act (ADA): Federal law requiring accessible design and construction in public accommodations and commercial facilities

Federal Acquisition Regulation (FAR): Comprehensive set of rules governing federal procurement procedures, applicable if federal funding is involved

State Construction Lien Laws: State-specific regulations governing mechanics' liens and security interests in construction projects

State Contractor Licensing: State-specific requirements for contractor qualification, registration, and licensing

State Building Codes: State-specific construction standards and requirements for building safety and integrity

State Insurance Requirements: State-mandated insurance coverage requirements for construction projects and contractors

Workers' Compensation Laws: State-specific requirements for providing insurance coverage for worker injuries and illnesses

Prompt Payment Acts: State-specific laws governing timing and terms of payments in construction projects

Little Miller Act: State versions of the federal Miller Act requiring payment and performance bonds on public projects

Environmental Regulations: Federal and state environmental protection requirements affecting construction projects

Local Zoning Laws: Municipal and county regulations governing land use and construction parameters

Cost Plus Contract Elements: Specific contractual provisions including cost definitions, fee structures, change orders, payment terms, and documentation requirements

Dispute Resolution Procedures: Legal framework and contractual provisions for resolving construction disputes and claims

Warranty Provisions: Legal requirements and standard practices for construction warranties and guarantees

Indemnification Requirements: Legal provisions governing risk allocation and liability between contracting parties

Documentation Requirements: Legal and contractual requirements for maintaining records of costs, expenses, and project documentation

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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