Cost Plus Contractor Agreement for Malaysia

Cost Plus Contractor Agreement Template for Malaysia

A comprehensive agreement governed by Malaysian law that establishes a cost-plus pricing mechanism between a principal and a contractor, where the contractor is compensated for all allowed costs incurred plus an agreed-upon fee or percentage markup. The agreement includes detailed provisions for cost verification, project management procedures, and compliance with Malaysian construction regulations including CIPAA 2012. It addresses specific requirements for contractor registration, local content rules, and Malaysian safety standards while providing flexibility for project-specific cost management and control mechanisms.

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What is a Cost Plus Contractor Agreement?

The Cost Plus Contractor Agreement is designed for projects in Malaysia where traditional fixed-price contracts may not be suitable due to uncertain scope or complex project requirements. This agreement type is particularly useful for projects with evolving specifications or where flexibility in scope is needed. The document incorporates Malaysian legal requirements, including compliance with the Construction Industry Payment and Adjudication Act 2012 (CIPAA) and Construction Industry Development Board (CIDB) regulations. It provides a framework for transparent cost reporting, markup calculations, and project management procedures while protecting both parties' interests through clear risk allocation and dispute resolution mechanisms. The agreement is structured to accommodate various project sizes and complexities while ensuring compliance with Malaysian construction industry standards and practices.

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

1. Parties: Identification of the principal/employer and the contractor, including registration numbers and addresses

2. Background: Context of the agreement, project overview, and basis for engaging the contractor

3. Definitions: Definitions of key terms including 'Cost', 'Fee', 'Works', 'Project', and other contract-specific terminology

4. Scope of Works: Detailed description of the contractor's obligations and deliverables

5. Cost Plus Fee Structure: Definition of allowable costs, fee calculation method, and payment terms

6. Payment Terms: Billing procedures, payment timeline, and documentation requirements for costs and fees

7. Contractor's Obligations: General and specific obligations including quality standards, reporting, and compliance requirements

8. Principal's Obligations: Responsibilities of the principal including access, information provision, and approvals

9. Project Management: Management structure, reporting lines, and decision-making processes

10. Time for Completion: Project schedule, milestones, and completion requirements

11. Variations: Process for managing changes to scope, costs, or schedule

12. Insurance and Indemnity: Required insurance coverage and indemnification obligations

13. Termination: Grounds and procedures for contract termination

14. Dispute Resolution: Process for resolving disputes including CIPAA requirements

15. General Provisions: Standard clauses including notices, governing law, and entire agreement

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

1. Performance Security: Required when the principal demands bank guarantees or performance bonds

2. Intellectual Property Rights: Needed when the works involve design or creative elements

3. Environmental Compliance: Required for projects with significant environmental impact

4. Local Content Requirements: Include when project must meet specific Malaysian local content rules

5. Force Majeure: Detailed force majeure provisions for high-risk or long-term projects

6. Step-In Rights: Include for critical projects where principal may need to take over

7. Liquidated Damages: Optional in cost-plus contracts but may be needed for specific milestones

8. Warranty Period: Include when specific warranty obligations extend beyond completion

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

1. Schedule 1 - Scope of Works: Detailed technical specifications and drawings

2. Schedule 2 - Cost Elements: Breakdown of allowable costs, excluded costs, and markup calculations

3. Schedule 3 - Key Personnel: List of key personnel from both parties with roles and responsibilities

4. Schedule 4 - Project Schedule: Detailed project timeline, milestones, and completion dates

5. Schedule 5 - Required Insurance: Specific insurance types and coverage amounts

6. Schedule 6 - Forms and Procedures: Standard forms for progress claims, variations, and approvals

7. Schedule 7 - Rate Schedule: Agreed rates for labor, equipment, and materials

8. Appendix A - Site Information: Site details, access requirements, and existing conditions

9. Appendix B - Quality Assurance Plan: Quality standards and inspection procedures

10. Appendix C - HSE Requirements: Health, safety, and environmental requirements

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

Jurisdiction

Malaysia

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Construction

Infrastructure

Oil & Gas

Manufacturing

Industrial Development

Property Development

Mining

Utilities

Telecommunications

Healthcare Facilities

Relevant Teams

Legal

Commercial

Procurement

Finance

Operations

Project Controls

Risk Management

Compliance

Technical Services

Contract Administration

Relevant Roles

Project Director

Construction Manager

Contract Manager

Procurement Manager

Commercial Director

Project Control Manager

Cost Controller

Quantity Surveyor

Risk Manager

Legal Counsel

Finance Director

Technical Director

Operations Manager

Compliance Officer

Chief Financial Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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