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A cost plus contract states that a client agrees to reimburse a construction company for building expenses such as labor, materials, and other costs, plus additional payment usually stated as a percentage of the contract's full price. This type of construction contract is an alternative to lump sum agreements.
Construction law builds upon general legal principles and methodologies and incorporates the regulatory framework (including security of payment, planning, environmental and building regulations); contract methodologies and selection (including traditional and alternative forms of contracting); subcontract issues; causes of action, and liability, arising in contract, negligence and on other ...
Various abbreviations used for this type of contract are LSTK for lump sum turn key, EPIC for engineering, procurement, installation & commissioning and EPCC for engineering, procurement, construction and commissioning. Use of EPIC is common, e.g., by FIDIC and most Persian Gulf countries. Use of LSTK is common in the Kingdom of Saudi Arabia.
The parties have completely agreed to the terms, but have made the execution of some terms in the contract conditional on the creation of a formal contract; or It is merely an agreement to agree lacking the requisite intention to create legal relations, and the deal will only be binding unless and until the formalized contract has been drawn up.
Typical Lump Sum Contract Structure. A lump sum contract in construction is one type of construction contract, sometimes referred to as stipulated-sum, where a single price is quoted for an entire project based on plans and specifications and covers the entire project and the owner knows exactly how much the work will cost in advance. [1]
The CSI Construction Contract Administration Practice Guide (CCAPG) provides a detailed discussion of the process of successfully delivering a construction project, focused on the roles of the various participants in the process and their relationship to one as described by contractual requirements in standard construction contracts.
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