Guidelines when using cost plus contracts

A cost plus contract is entered into by a builder and customer when a fixed price can not be given at the time the contract is entered into. This is usually because the cost of materials and labour can not be easily quoted on until the works commence.

An HIA Cost Plus Contract warns a customer that the contract price is not known and any project estimate provided is an estimate only.

Contained in this resource is guidance on what builders need to be aware of when providing an estimate. A poorly calculated or miscommunicated estimate may expose the builder to liability under Australian consumer laws, so this information can be used to avoid disputes and/or claims.

Also provided is a case study example of how to estimate the price of building works using an HIA NSW Cost Plus Contract.  

What does it include?

• What a cost plus contract is
• Whether you need to provide an estimate Contract Price
• What to do if the owner insists on an estimated Contract Price
• What happens when the final price of the works exceeds the estimate
• Key contract provisions.