Cost Plus Contract Form - England and Wales

Cost Plus Contract Form for the United Kingdom

Cost Plus Contract Form Template for England and Wales

A Cost Plus Contract Form is a legally binding agreement under English and Welsh law where the client agrees to reimburse the contractor for all allowed costs incurred in executing the works, plus an agreed fee or percentage markup for overhead and profit. This contract type is particularly suitable for projects where the scope cannot be fully defined at the outset or where flexibility is required. It includes detailed provisions for cost verification, audit rights, and payment procedures, while ensuring compliance with UK construction legislation and industry standards.

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What is a Cost Plus Contract Form?

The Cost Plus Contract Form is designed for use in situations where project costs cannot be accurately predicted at the outset, or where flexibility in scope is required. Common in complex construction and engineering projects under English and Welsh law, this contract type provides transparency in cost management while protecting both parties' interests. It details allowable costs, markup structures, payment mechanisms, and audit rights, ensuring compliance with UK construction legislation including the Housing Grants, Construction and Regeneration Act 1996. The document is particularly valuable for projects requiring close collaboration between parties and where traditional fixed-price contracts may not be suitable.

What sections should be included in a Cost Plus Contract Form?

1. Parties: Identifies and defines the contracting parties

2. Background: Sets out the context and purpose of the agreement

3. Definitions: Defines key terms used throughout the contract

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

5. Cost Definition and Structure: Defines allowable costs and calculation methodology

6. Fee/Profit Structure: Specifies the agreed markup or fee arrangement

7. Payment Terms: Details payment procedures, timing, and mechanisms

8. Record Keeping and Audit Rights: Requirements for maintaining cost records and client's audit rights

9. Duration and Programme: Project timeline and key milestones

10. Termination: Conditions and procedures for contract termination

What sections are optional to include in a Cost Plus Contract Form?

1. Performance Incentives: Optional provisions for bonus structures when meeting or exceeding specified targets

2. Value Engineering: Optional procedures for cost optimization proposals and implementation

3. Risk Sharing: Optional special arrangements for sharing cost risks between parties

4. Guaranteed Maximum Price: Optional provisions setting an upper limit on total costs

What schedules should be included in a Cost Plus Contract Form?

1. Schedule of Rates: Detailed breakdown of labor and material rates

2. Cost Categories: Detailed list of allowable and disallowed costs

3. Project Programme: Detailed timeline and milestone schedule

4. Reporting Templates: Standard forms for cost reporting and verification

5. Key Personnel: List of key team members and their roles

6. Insurance Requirements: Detailed insurance specifications and coverage levels

Authors

Alex Denne

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

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Housing Grants, Construction and Regeneration Act 1996: Primary legislation governing construction contracts, including payment mechanisms and adjudication procedures

Late Payment of Commercial Debts (Interest) Act 1998: Legislation governing interest on late payments in commercial transactions

Contracts (Rights of Third Parties) Act 1999: Legislation determining third party rights in contractual relationships

Supply of Goods and Services Act 1982: Legislation setting out implied terms in contracts for goods and services

Unfair Contract Terms Act 1977: Legislation restricting how far civil liability for breach of contract can be avoided

Construction (Design and Management) Regulations 2015: Regulations governing health, safety and welfare in construction projects

Building Regulations 2010: Standards for design and construction of buildings

Public Contracts Regulations 2015: Regulations governing public sector procurement processes

Value Added Tax Act 1994: Legislation governing VAT obligations in construction contracts

Construction Industry Scheme (CIS): Tax deduction scheme for payments to subcontractors in the construction industry

Companies Act 2006: Principal legislation governing company operations and corporate entities

Working Time Regulations 1998: Regulations governing working hours and conditions

Health and Safety at Work Act 1974: Primary legislation for workplace health and safety

Equality Act 2010: Legislation protecting against discrimination in the workplace

JCT Guidelines: Standard forms of construction contracts and guidance from the Joint Contracts Tribunal

NEC Principles: New Engineering Contract framework principles for project management and contract strategies

FIDIC Principles: International standards for consulting engineering contracts

UK GDPR: Data protection regulation governing personal data processing

Data Protection Act 2018: UK's implementation of data protection standards

Common Law Contract Principles: Legal principles established through case law covering contract formation, consideration, breach, and remedies

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Download a Standard Template

What is a Cost Plus Contract Form?

What sections should be included in a Cost Plus Contract Form?

What sections are optional to include in a Cost Plus Contract Form?

What schedules should be included in a Cost Plus Contract Form?

Authors

Alex Denne

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