Fixed Price vs Cost Plus Building Contracts

A fixed price can provide certainty for a defined scope, but it is only as complete as the contract documents. Provisional sums, prime cost items, exclusions, latent conditions and client changes can still move the final total.

Ask what information the price assumes, how long the offer remains valid and which events permit an adjustment.

Under cost plus, the client pays actual project costs plus an agreed fee or margin. This may suit uncertain renovation work or fast-start projects, but it needs disciplined records, agreed procurement rules, budget updates and authority limits.

Confirm which costs attract the margin, whether rebates are credited, how invoices and timesheets are evidenced and what happens before a forecast overrun is committed.

For either model, establish a written scope, drawings, specification, programme, payment basis, variation process, insurance obligations, dispute pathway and handover requirements. Obtain independent legal advice before signing a major residential building contract.