Page 93 - BASIC GUIDELINE FOR QS

Professional Practice: Guideline for Quantity Surveyor Chapter 3

The advantage of this contracting method is that the owner knows before the
work begins what the final cons of the project will be. The designer will prepare a

complete set of contract documents, which the owner then either bids out or negotiates
with a contractor.
Contractor is free to use any means and methods to complete work and he also

be responsible for proper work performance. Contractor also has greater ability for profit.

3.5.2 Non-Traditional Contract

i. Cost Reimbursement or Cost Plus

A cost reimbursement Contract, also termed a cost-plus contract. It is a contract where a
contractor is paid for all of its allowed expenses to a set limit plus additional payment to

allow for a profit.
Cost reimbursement Contract contrast with fixed-price contract, in which the
contractor is paid a negotiated amount regardless of incurred expenses. This types of

contracts are favoured where the scope of the work is indeterminate or highly uncertain
and the kinds of labour, material and equipment needed are also uncertain.
Under this arrangement complete records of all time and materials spent by the

contractor on the work must be maintained.
Cost plus type contract makes sense when the owner needs to complete a
project quickly or when the project is difficult to define accurately up front. The project

needs a qualified and reputable designer and builder, as well as an active client.
This type of contract is used in construction management and design-build

delivery methods. E.g. of circumstances - , emergency work project ;
Cost reimbursement contract are:
• Cost plus percentage

• Cost plus fixed fee
• Cost plus target fee

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