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Cost Plus Construction Agreement Template for Philippines

A comprehensive construction agreement governed by Philippine law that establishes a cost-plus pricing structure between an owner/developer and a contractor. The agreement details the reimbursement of actual costs incurred during construction plus an agreed-upon fee or percentage markup. It includes specific provisions compliant with Philippine construction regulations, labor laws, and local building codes while addressing cost tracking, payment procedures, quality control, and project management requirements. The document incorporates necessary safeguards for both parties, ensuring transparency in cost reporting and appropriate risk allocation within the Philippine legal framework.

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What is a Cost Plus Construction Agreement?

The Cost Plus Construction Agreement is specifically designed for construction projects in the Philippines where the final costs cannot be accurately determined at the outset, or where flexibility in scope is required. This agreement type is particularly suitable for complex projects, renovations, or situations where unexpected conditions might be encountered. The document complies with Philippine construction laws, including the Civil Code, Construction Industry Authority of the Philippines (CIAP) regulations, and relevant labor laws. It provides detailed mechanisms for cost tracking, verification of expenses, calculation of the contractor's fee, and project management procedures. The agreement includes essential provisions for quality control, safety standards, and environmental compliance specific to Philippine jurisdiction, while ensuring transparency and fairness in the cost-plus pricing structure. This format is often preferred when trust exists between parties and when project specifications may evolve during construction.

What sections should be included in a Cost Plus Construction Agreement?

1. Parties: Identification of the Owner and Contractor, including their complete legal names, addresses, and registration details

2. Background: Context of the agreement, brief description of the project, and the basis for choosing a cost-plus arrangement

3. Definitions: Definitions of key terms including 'Cost of Work', 'Contractor's Fee', 'Reimbursable Expenses', and other contract-specific terms

4. Scope of Work: Detailed description of the construction work to be performed, including reference to plans and specifications

5. Contractor's Services: Comprehensive listing of all services to be provided by the contractor, including management, supervision, and coordination

6. Cost of the Work: Detailed breakdown of what constitutes reimbursable costs, including direct costs, labor, materials, and equipment

7. Contractor's Fee: Structure and calculation of the contractor's fee or markup, including any performance incentives

8. Payment Terms: Payment procedures, timing, documentation requirements, and verification process for costs

9. Project Schedule: Timeline for completion, milestones, and procedures for schedule modifications

10. Changes in Work: Procedures for handling change orders and their impact on costs and schedule

11. Quality Control: Quality standards, inspection procedures, and acceptance criteria

12. Contractor's Personnel: Requirements for key personnel, staffing levels, and labor compliance

13. Insurance and Bonds: Required insurance coverage and bonding requirements

14. Warranties: Contractor's warranties on workmanship and materials

15. Termination: Grounds and procedures for contract termination by either party

16. Dispute Resolution: Procedures for resolving disputes, including reference to Philippine laws and jurisdiction

What sections are optional to include in a Cost Plus Construction Agreement?

1. Value Engineering: Include when the project may benefit from cost optimization opportunities during construction

2. Guaranteed Maximum Price: Include when the parties want to set an upper limit on the total project cost

3. Environmental Compliance: Include for projects with significant environmental impact or requirements

4. Local Community Relations: Include for projects in sensitive community areas or with significant community impact

5. Force Majeure: Include detailed provisions for areas prone to natural disasters or specific risk factors

6. Financing Provisions: Include when project financing arrangements need to be addressed

7. Multiple Prime Contractors: Include when other contractors will be working on the same project

8. Acceleration Provisions: Include when early completion bonuses or acceleration might be relevant

What schedules should be included in a Cost Plus Construction Agreement?

1. Schedule A - Scope of Work: Detailed description of all work items, specifications, and deliverables

2. Schedule B - Project Plans and Drawings: Complete set of approved construction drawings and specifications

3. Schedule C - Cost Categories: Detailed breakdown of cost categories and what constitutes reimbursable costs

4. Schedule D - Fee Calculation: Detailed methodology for calculating the contractor's fee and any incentives

5. Schedule E - Key Personnel: List of key personnel and their roles, including required qualifications

6. Schedule F - Project Schedule: Detailed project timeline, milestones, and critical path activities

7. Schedule G - Required Insurance: Detailed insurance requirements and minimum coverage amounts

8. Schedule H - Forms and Procedures: Standard forms for change orders, payment applications, and other procedures

9. Schedule I - Quality Control Plan: Detailed quality control procedures and acceptance criteria

10. Appendix 1 - Site Information: Site conditions, access requirements, and any known restrictions

11. Appendix 2 - Permits and Approvals: List of required permits and responsible parties

Authors

Alex Denne

Advisor @ GenieAI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Philippines

Publisher

GenieAI

Cost

Free to use

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