Real Estate Glossary

What is Cost-Plus Contract?

A cost-plus contract is a type of construction contract in which the contractor is paid for the actual cost of the materials and labor used in a project, plus an additional fee (also known as a markup) for their services. The fee is typically a percentage of the total cost of the project, and it is intended to cover the contractor's overhead and profit. Cost-plus contracts are commonly used when the scope of a project is uncertain or when the owner wants to have more control over the project's budget.