Cost-Plus Contract
Definition
A cost-plus contract (also called a prime cost contract or cost-reimbursable contract) is one where the contractor is paid for all actual costs incurred, labour, materials, plant, subcontractors, plus an agreed fee (either a fixed sum or a percentage) to cover overheads and profit. The employer bears the risk of cost overruns.
In construction tendering, this means...
Cost-plus arrangements are used where scope cannot be adequately defined in advance, emergency repairs, highly complex refurbishments, or projects where the design is developed in parallel with construction. They offer flexibility but require rigorous cost reporting and transparent record-keeping. GCs working on cost-plus projects need disciplined systems for tracking and evidencing every cost incurred.
Related terms
Takshy automates the parts of the tendering process that involve cost-plus contract, extracting scope, managing documents, and keeping your workflow organised from first document to final award.
Automate your tendering with Takshy
Understanding the terminology is step one. Takshy handles the rest, from extracting scope from project documents to sending structured RFQs and managing the returns.
Still using spreadsheets? See how Takshy compares.