What is the main characteristic of a cost-plus contract?
Correct answer: D. Payment consists of cost plus an agreed fee or percentage
- A. Payment is based only on measured quantities
- B. Payment is determined by the lowest tendered amount
- C. Payment is made only after a fixed completion date
- D. Payment consists of cost plus an agreed fee or percentage
Explanation
A cost-plus contract reimburses the contractor for allowable project costs and adds an agreed fee or percentage for overhead and profit. Unlike a lump-sum contract, the final amount is not fixed at the start.
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About Construction Management and Estimation
Construction management covers planning, scheduling, resource control, contracts, procurement, site organisation, safety, quality assurance and project documentation. Estimation includes quantity take-off, rate analysis, bill preparation, valuation and cost control, with attention to the difference between direct and indirect costs and between an estimate, a tender and a final account.
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