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Cost Plus Contract for New Zealand

Cost Plus Contract Template for New Zealand

A Cost Plus Contract under New Zealand law is a comprehensive agreement where the client agrees to pay the actual costs incurred by the contractor plus an agreed fee or percentage markup. This contract type is governed by New Zealand commercial law, including the Contract and Commercial Law Act 2017 and, where applicable, the Construction Contracts Act 2002. It details the basis for cost calculations, markup arrangements, payment terms, cost verification procedures, and audit rights, providing flexibility for projects where exact costs cannot be determined at the outset while ensuring transparency and fair dealing between parties.

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What is a Cost Plus Contract?

The Cost Plus Contract is designed for situations where the final scope or costs of work cannot be accurately predetermined at the contract's outset. This contract type, governed by New Zealand law, is commonly used in complex projects, renovation works, emergency repairs, or situations where flexibility in scope is required. It provides a framework for transparent cost recovery plus a predetermined profit margin, while including mechanisms for cost verification, reporting, and audit rights. The document incorporates provisions compliant with New Zealand legislation, including the Contract and Commercial Law Act 2017 and the Fair Trading Act 1986, and addresses GST requirements under the Goods and Services Tax Act 1985. This contract type is particularly valuable when rapid mobilization is required or when the scope of work may evolve significantly during execution.

What sections should be included in a Cost Plus Contract?

1. Parties: Identification of the contractor and principal, including full legal names and addresses

2. Background: Context of the agreement, relationship between parties, and general purpose of the cost-plus arrangement

3. Definitions and Interpretation: Detailed definitions including 'Actual Cost', 'Fee', 'Reimbursable Costs', 'Supporting Documentation', and other key terms

4. Scope of Works: Detailed description of the works or services to be provided under the cost-plus arrangement

5. Cost Structure and Fee: Definition of allowable costs, calculation method for the contractor's fee (percentage or fixed), and markup provisions

6. Payment Terms: Payment process, timing, supporting documentation requirements, and invoice procedures

7. Cost Verification and Reporting: Requirements for cost documentation, reporting frequency, and verification procedures

8. Contractor's Obligations: Key responsibilities including record-keeping, cost management, and performance standards

9. Principal's Obligations: Responsibilities including timely payment, access provision, and information supply

10. Time and Programme: Project timeline, milestones, and schedule management requirements

11. Variations: Process for handling changes to scope and their impact on costs and fee

12. Audit Rights: Principal's rights to audit costs and supporting documentation

13. Insurance and Liability: Required insurance coverage and liability limitations

14. Termination: Grounds for termination and financial settlement procedures

15. Dispute Resolution: Process for resolving disputes, including cost-related disagreements

16. General Provisions: Standard contract clauses including governing law, notices, and assignment

What sections are optional to include in a Cost Plus Contract?

1. Performance Incentives: Optional provisions for performance bonuses or incentives, used when seeking to encourage cost savings or early completion

2. Guaranteed Maximum Price: Optional cap on total costs, used when requiring some cost certainty while maintaining cost-plus structure

3. Value Engineering: Procedures for identifying and implementing cost savings, used in larger projects

4. Procurement Procedures: Specific requirements for procurement of materials and subcontractors, used in larger projects

5. Quality Management: Specific quality control requirements and procedures, used in technical or complex projects

6. Environmental Compliance: Environmental management requirements, used when project has significant environmental aspects

7. Health and Safety: Detailed health and safety requirements, used when significant site works or hazardous activities involved

8. Confidentiality: Detailed confidentiality provisions, used when dealing with sensitive commercial information

What schedules should be included in a Cost Plus Contract?

1. Schedule 1 - Scope of Works: Detailed description of works or services to be provided

2. Schedule 2 - Fee Calculation: Detailed breakdown of fee structure, markup percentages, and calculation methods

3. Schedule 3 - Allowable Costs: Comprehensive list of what constitutes reimbursable costs

4. Schedule 4 - Key Personnel: List of key personnel and their charge-out rates

5. Schedule 5 - Required Insurance: Details of required insurance policies and coverage levels

6. Schedule 6 - Cost Reporting Templates: Standard forms for cost reporting and invoice submission

7. Schedule 7 - Programme: Project timeline and milestone dates

8. Appendix A - Supporting Documentation Requirements: Details of required documentation for cost verification

9. Appendix B - Rate Schedule: Schedule of agreed rates for labor, equipment, and materials if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

New Zealand

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions














































Clauses








































Relevant Industries

Construction

Engineering

Professional Services

Manufacturing

Research and Development

Infrastructure

Mining

Oil and Gas

Technology Implementation

Industrial Projects

Relevant Teams

Legal

Commercial

Procurement

Finance

Operations

Project Management

Risk Management

Contract Administration

Engineering

Cost Control

Relevant Roles

Commercial Manager

Project Manager

Contract Manager

Procurement Manager

Cost Controller

Quantity Surveyor

Construction Manager

Legal Counsel

Finance Manager

Operations Manager

Risk Manager

Chief Financial Officer

Engineering Manager

Technical Director

Commercial Director

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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