Basic principle underlying cost-plus-fee contracts is that the contractor gets reimbursed by the owner for all costs attributable to the project and in addition he will be paid a fee for his services. Thus it is intended that the contractor be assured of a profit on his operations.
This assurance eliminates divergence of financial interests, and, when the fee is a fixed amount, the relationship of contractor to owner tends to become a professional one.
The contractor exercises his skill in the techniques of construction, procurement of labour and materials, anf management for the owners’s benefit.
The amount of the fee may be established as a percentage of the actual cost of construction or as a fixed fee agreed upon in advance.
By electing to build the project under a cost-plus-fee (CPFF) arrangement tactically indicates that factors other than the lowest possible cost are paramount. The desire for High quality construction or earliest possible start and completion with complete set of Drawings and specifications will be available.
Under Cost-plus-fee (CPFF) contracts there is no incentive for the contractor to inflate construction costs.
We normally charge 15-20% over and above the actual cost of construction depending over the terms and conditions mutually agreed both by the owners and us.