Fee

Advantages

1. Fixed percentage of the cost

of the work

1. Start construction without

waiting for the whole set of
drawings and specifications

2. Fixed fee
3. Fixed fee with a guaranteed
top price

2. More flexibility for the owner

to make changes as work
progresses

4. Fixed fee with bonus

5. Fixed fee with an
arrangement for sharing any
cost saving.

3. Draw the contractor expertise

during design

- also known as Cost Plus Contract

- contractor will be reimbursed for all
actual costs plus an agreed fee to
cover his services (overhead and
profit)

Type of Contracts
1. Cost plus Percentage of Cost
2. Cost plus Fixed Fee
3. Target Cost with Variable
Fees Contract

4. Guaranteed Maximum Price

Contract (GMP)

- contractor must make all his records

and accounts available for inspection
by the client or by some agreed

Disadvantages
1. Difficult to predict the final
cost and the distribution of it,
which may cause financial
problems to the owner
2. Contractor pays less attention
to cost control