Examples of Fixed Price Contract

1. Fixed Price Contract

Fixed Price contract is a construction contract under which contractor undertake a project for a fixed price. The fixed price may be subsequently increased for additional work.

Example # 1 Fixed Price Contract

ABC Company is awarded a contract to construct a bridge for $ 10 million. The expected cost for construction of bridge is $ 7 million.

Example # 2 Fixed Price Contract

Government announces the construction of an Olympic ground for coming Olympics for a fixed price of 500 million dollar. The ground is to be completed within 2 years.

2. Cost plus Contract

Cost plus contract is contract under which the contract is reimbursed for the cost incurred plus a fee is at determined rate is offered for undertaking the contract. The fee may be a percentage of the cost incurred or a fixed amount.

Example # 1 Cost plus Contract

ABC & Company undertake a contract to construct a tunnel which is to be completed in four years. ABC & Company and company are to be reimbursed cost plus 10% fee on cost incurred it.

Example # 2 Cost plus Contract

XYZ & company bid for a project to construct a House and XYZ is offered a fee of $ 50,000 over and above the cost incurred by XYZ.