The Cost Plus Construction Agreement is typically used in the United Arab Emirates for complex construction projects where the exact scope or costs cannot be accurately predetermined. This contract type is particularly valuable for urgent projects, those with significant potential for variations, or specialized construction works where detailed upfront pricing would be impractical. The agreement provides a framework for transparent cost management while protecting both parties' interests under UAE law. It includes detailed provisions for cost verification, fee calculation, quality control, and project management, all aligned with UAE Civil Code requirements and local construction regulations. The document is structured to ensure clear delineation of responsibilities, risk allocation, and dispute resolution mechanisms specifically adapted to the UAE legal environment.
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1. Parties: Identification of the Employer and Contractor, including full legal names, registration details, and addresses
2. Background: Context of the construction project, brief description of the works, and the basis for using a cost-plus arrangement
3. Definitions: Defined terms used throughout the agreement, including Project, Works, Cost, Fee, etc.
4. Scope of Works: Detailed description of the construction works to be performed by the Contractor
5. Contractor's Obligations: Core responsibilities including workmanship, compliance with laws, safety requirements, and project management
6. Employer's Obligations: Key responsibilities including site access, permits, approvals, and information provision
7. Cost Definition and Components: Detailed breakdown of what constitutes 'Cost' under the agreement
8. Fee Structure and Payment: Definition of the Contractor's fee (percentage or fixed) and payment mechanics
9. Cost Control and Reporting: Requirements for cost tracking, reporting, and budget management
10. Time for Completion: Project schedule, milestones, and completion requirements
11. Variations: Process for handling changes to the scope or cost of works
12. Quality and Inspection: Quality standards, testing requirements, and inspection procedures
13. Defects Liability: Obligations regarding defect rectification and warranty period
14. Insurance and Indemnities: Required insurance coverage and indemnification obligations
15. Termination: Grounds and procedures for contract termination
16. Dispute Resolution: Process for resolving disputes, including UAE law requirements
17. General Provisions: Standard contractual provisions including notices, assignment, and entire agreement
1. Performance Security: Required when the Employer needs additional financial security, specifying requirements for bonds or guarantees
2. Advance Payment: Include when advance payments are to be made, specifying amount and recovery mechanism
3. Design Obligations: Required when the Contractor has design responsibilities in addition to construction
4. Subcontracting: Include detailed provisions when significant subcontracting is anticipated
5. Environmental Requirements: Include for projects with significant environmental impacts or requirements
6. Local Content Requirements: Include when there are specific UAE local content or Emiratization requirements
7. Force Majeure: Detailed force majeure provisions for high-risk or long-term projects
8. Step-In Rights: Include for critical projects where Employer may need to step in and take control
1. Schedule 1 - Scope of Works: Detailed technical specification and description of the works
2. Schedule 2 - Cost Components: Detailed breakdown of allowable costs and excluded costs
3. Schedule 3 - Fee Calculation: Formula and methodology for calculating the Contractor's fee
4. Schedule 4 - Project Programme: Detailed project schedule and milestones
5. Schedule 5 - Key Personnel: List of key personnel and their roles/responsibilities
6. Schedule 6 - Forms of Certificates: Templates for payment certificates, completion certificates, etc.
7. Schedule 7 - Insurance Requirements: Detailed insurance requirements and minimum coverage
8. Schedule 8 - Site Information: Site details, access points, and relevant site conditions
9. Appendix A - Form of Performance Security: Template for performance bond or guarantee
10. Appendix B - Form of Advance Payment Guarantee: Template for advance payment guarantee
11. Appendix C - Cost Control Procedures: Detailed procedures for cost reporting and control
12. Appendix D - Quality Control Plan: Quality management procedures and requirements
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