Under Cost plus Contract, the contract price is ascertained
by adding a percentage of profit to the total cost of the work. Such type of contracts are
entered into when it is not possible to estimate the Contract Cost with reasonable accuracy
due to unstable condition of material, labour services, etc.
Cost plus contracts have the following advantages and disadvantages :
Advantages :
(i) The Contractor is assured of a fixed percentage of profit. There is no risk of incurring any
loss on the contract.
(ii) It is useful specially when the work to be done is not definitely fixed at the time of making
the estimate.
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