Cost Plus Contractor Agreement for the United Kingdom

Cost Plus Contractor Agreement Template for England and Wales

A Cost Plus Contractor Agreement is a legal contract governed by the laws of England and Wales that establishes a framework where the contractor is reimbursed for all allowed costs incurred in the execution of works, plus an agreed fee or percentage markup. This agreement provides transparency in cost management while offering flexibility for projects where the scope may not be fully defined at the outset. It includes detailed provisions for cost verification, payment procedures, and audit rights.

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What is a Cost Plus Contractor Agreement?

The Cost Plus Contractor Agreement is designed for projects where exact costs cannot be predetermined or where flexibility in scope is required. Common in complex construction and engineering projects under English and Welsh law, this agreement type provides detailed mechanisms for cost verification, markup calculation, and payment procedures. It's particularly suitable for projects with uncertain scope, emergency works, or where transparency in costs is paramount. The agreement includes provisions for audit rights, cost reporting, and change management, while ensuring compliance with UK construction legislation and industry standards.

What sections should be included in a Cost Plus Contractor Agreement?

1. Parties: Identification and details of the contracting parties (employer and contractor)

2. Background: Context of the agreement and general project information

3. Definitions: Key terms used throughout the agreement

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

5. Cost Structure: Definition of allowable costs and fee/markup arrangements

6. Payment Terms: Payment procedures, timing, and documentation requirements

7. Contractor Obligations: Key responsibilities and duties of the contractor

8. Employer Obligations: Key responsibilities and duties of the employer

9. Duration and Programme: Project timeline and key milestones

10. Insurance and Liability: Required insurance coverage and liability provisions

11. Termination: Circumstances and procedures for contract termination

What sections are optional to include in a Cost Plus Contractor Agreement?

1. Performance Guarantees: Specific performance metrics and guarantees for large or complex projects requiring specific performance standards

2. Value Engineering: Procedures for cost optimization when cost reduction opportunities may arise during execution

3. Environmental Requirements: Specific environmental obligations for projects with significant environmental impact

4. Force Majeure: Provisions for unforeseen circumstances, particularly relevant for longer-term projects or high-risk environments

What schedules should be included in a Cost Plus Contractor Agreement?

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

2. Project Specifications: Technical specifications and requirements

3. Programme of Works: Detailed project timeline and milestones

4. Schedule of Drawings: List of all relevant drawings and technical documents

5. Insurance Requirements: Detailed insurance specifications and certificates

6. Quality Control Procedures: Specific quality management requirements

7. Health and Safety Requirements: Detailed H&S procedures and requirements

8. Form of Applications for Payment: Templates for payment applications

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 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 governing quality standards and implied terms in supply contracts

Construction Act 2009: Updates to construction contract legislation, including payment and adjudication provisions

Companies Act 2006: Primary legislation governing corporate entities and their operations

Employment Rights Act 1996: Legislation protecting workers' rights and employment conditions

Working Time Regulations 1998: Regulations governing working hours, rest periods, and related matters

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

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

Value Added Tax Act 1994: Legislation governing VAT application and compliance in commercial transactions

Public Contracts Regulations 2015: Regulations governing public sector procurement and contracting

Building Regulations 2010: Technical and safety standards for construction works

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

NEC Frameworks: New Engineering Contract standardized contract frameworks for construction projects

Consumer Rights Act 2015: Legislation protecting consumer rights in commercial transactions

Consumer Protection from Unfair Trading Regulations 2008: Regulations protecting consumers from unfair business practices

Environmental Protection Act 1990: Legislation governing environmental protection and waste management

Climate Change Act 2008: Legislation setting requirements for carbon reduction and environmental sustainability

UK GDPR: Data protection regulation governing personal data processing and privacy

Data Protection Act 2018: UK's implementation of data protection requirements and additional provisions

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What is a Cost Plus Contractor Agreement?

What sections should be included in a Cost Plus Contractor Agreement?

What sections are optional to include in a Cost Plus Contractor Agreement?

What schedules should be included in a Cost Plus Contractor Agreement?

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