Building Procurement Systems

Cost - plus contracts

• The contractor is paid the actual cost of the work plus an agreed percentage of the actual or allowable cost to cover overheads and profit . 
• Useful in an emergency where there is insufficient time avaialble to prepare detailed schemes prior to commencement of work . 
• Contractor could increase profit by delaying the completuion of works . No incentive exists for the contractor to complete the works as quickly as possible or try to reduce costs . 
• No real incentive exists for the contractor to secure efficient working .