Cost-Plus Bids: Useful Information for Home and Building Owners

Published on – Apr 23, 2014

When building a specific structure, you’re bound to cross paths with different types of contractors. During the construction’s finishing phase, you’ll need to hire tradesmen who specialise in plumbing and electrical services. If your builder doesn’t take care of fittings, you’ll also need to enlist independent window installers.

If that’s the case, you can get in touch with any of these companies to obtain such services:

Apart from contractors, you’ll also have to source the necessary building materials. Prefabricated parts, like those produced by, are much in demand.

Once the structure is completed, you’ll also have to purchase implements to make it more liveable. Say you’re building a home in Australia. Orion water tanks in Tasmania allow you to store gallons worth of rainwater for household use.

Now that we’ve touched on construction materials and services, let’s proceed to the “meat” of this article. Today, we’ll be talking about cost-plus bids.

What is a cost-plus bid?

This is a type of construction bid used on jobs with many unknown variables and hidden conditions. Otherwise known as time-and-material bids, it’s generally used for smaller jobs. Nonetheless, it can also in bigger projects, especially when the plans are hazy.

How does it benefit the client?

Home or building owners only pay for the actual work that’s completed. A contractor doesn’t have to add big extraneous factors into his fixed bid to cover unforeseen costs.

Are there specific categories?

Yes. In fact, there are two main variations to this approach:

1. Cost-plus-a-percentage

The client is billed for direct costs. This includes labour and materials. A specific percentage is added to cover the contractor’s overhead and profit.

2. Cost-plus-a-fixed -fee

The second approach uses the same process, except that the contractor gets a fixed fee. In such a scenario, the construction company is motivated to complete the job quickly and cheaply. Otherwise, his overhead and profit percentage continues to drop.

Ultimately, it’s still best to hire a builder that offers the most transparency. At Kennard Construction Ltd., we strive to give the best possible service to our clients, without the hidden costs.

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