How is a contractor’s fee determined in a cost plus contract?
In cost plus contract, the amount charged by a contractor is usually fixed or a percentage of the total project cost. This amount reimburses profit and overhead costs on the part of the contractor. To illustrate, assuming the project is having a value of 100000 dollars and they agreed on a fee of 15 percent then the contractor gets the amount of 15000 as fees. Performance incentives could also be a part of some contracts. The fee should be clearly stated in the contract in order to prevent confusion and leave both sides in a balanced position.
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