Cost plus contract

EstablishedGMP

Also: Cost reimbursable contract, CCDC 3

A construction contract in which the owner reimburses the contractor's actual costs of the work plus a fee, which may be fixed or a percentage, sometimes capped by a guaranteed maximum price.

Explanation

The owner carries most of the cost risk, so cost-plus contracts depend on clear definitions of reimbursable and non-reimbursable costs, audit rights and cost reporting. Variants include cost plus fixed fee, cost plus percentage fee, and cost plus fee with a guaranteed maximum price (GMP) and shared savings. In Canada the standard form is CCDC 3 Cost Plus Contract (2016).

Practical example

An emergency repair to a flood-damaged hospital basement is contracted cost plus a 9% fee because the extent of damage behind finishes is unknown. Weekly open-book reports track committed and actual costs.

Why it matters

Cost plus enables early starts and uncertain scopes, but without disciplined cost control and audit the owner has little protection against overruns.

Common confusion

Standards and references

  1. CCDC contract documents (catalogue). Canadian Construction Documents Committee (CCDC).Widely accepted professional interpretation
    Supports: CCDC 3 Cost Plus Contract, 2016 edition · Status: Catalogue lists CCDC 2 (2020), 3 (2016), 4 (2023), 5A/5B (2025), 11 (2019), 14/15 (2026), 17 (2025), 18 (2023), 30 (2025), 31 (2020), 32/33 (2026).

VDC Stack.io writes its own explanations and does not reproduce copyrighted standards text. Consult the cited standard for normative wording.

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VDC Stack.io. (2026). Cost plus contract. In VDC Stack.io Knowledge Dictionary. Retrieved from https://vdcstack.io/dictionary/cost-plus-contract/