General Contractor Agreement Cost Plus Fee Template for the United States

A General Contractor Agreement Cost Plus Fee creates a transparent partnership between you as the project owner and your general contractor, where you pay the actual construction costs plus an agreed-upon fee. This contract structure provides maximum visibility into project expenses while giving your contractor appropriate compensation for managing the work under United States construction law.

When do you need this document?

You need this agreement when undertaking construction projects where the full scope cannot be precisely defined at the start, such as major renovations of historic buildings, emergency repairs with unknown structural issues, or fast-track commercial developments. This contract type works well when you want to begin construction quickly without waiting for complete architectural plans, when market conditions make material costs unpredictable, or when your project requires specialized work that's difficult to price upfront. Government contracts and large institutional projects often use this structure to maintain cost transparency and comply with federal procurement requirements.

Key legal considerations

Your agreement must clearly define what constitutes allowable costs versus the contractor's fee to prevent disputes and cost overruns. Include detailed provisions for cost documentation, regular reporting requirements, and your right to audit expenses throughout the project. Establish maximum cost limits or guaranteed maximum price (GMP) clauses to protect against unlimited cost escalation. Address change order procedures, as cost-plus contracts can be vulnerable to scope creep without proper controls. Include specific language about subcontractor markup limitations, equipment rental rates, and administrative cost allocations. Consider requiring performance and payment bonds, especially for projects exceeding federal thresholds under the Miller Act.

Legal requirements in United States

Your contractor must hold valid licensing under applicable state contractor licensing laws, and the agreement must comply with federal regulations including Davis-Bacon Act prevailing wage requirements for federally funded projects. Include provisions ensuring compliance with Occupational Safety and Health Act (OSHA) standards and Americans with Disabilities Act (ADA) accessibility requirements. Address mechanics lien rights under your state's construction lien laws, including proper notice procedures and lien waiver protocols. For projects involving federal contracts, ensure compliance with the Contract Disputes Act and include required federal clauses. Include Fair Labor Standards Act compliance provisions regarding overtime and employment record keeping. State-specific requirements may include mandatory dispute resolution procedures, licensing bond requirements, and specific insurance coverage minimums that must be incorporated into your agreement.