A Cost plus Fee Contract is a contract where a contractor is reimbursed by the owner for the actual cost of performing works plus additional payment to allow for contractor’s overhead and profit in accordance with the contract. The owner and contractor agree and specify what is considered the cost item, and reimbursable expenses to the contractor, and contractor’s fee that the contractor will retain for profit and overhead. The Cost plus Fee Contract is an adequate for the experienced owner in the construction industry, or for an owner who cannot initially define or sufficiently detail the scope of the work, and labour, material and equipment needed are also uncertain. Under this contract terms and conditions, complete records of all time and materials spent by the contractor on the work must be maintained. (Called as a Reimbursable Contract)
Related Definitions in the Project: The Project Contract
