2.

2
COST-PLUS-PERCENTAGE-FEE AGREEMENT

CONTRACTOR’S NAME:
ADDRESS:
PHONE:
FAX:
E-MAIL:
LIC #:

DATE:

OWNER’S NAME:
ADDRESS:

PROJECT ADDRESS:

I. PARTIES
This contract (hereinafter referred to as “Agreement”) is made and
entered into on this _______ day of _________ , 20 ___ , by and
between _____________________________ , (hereinafter referred to
as “Owner”); and __________________________, (hereinafter referred
to as “Contractor”). In consideration of the mutual promises contained
herein, Contractor agrees to perform the following work subject to the
terms and conditions below:

II. GENERAL SCOPE OF WORK DESCRIPTION

(Additional Scope of Work page(s) attached: _____ Yes _____ No)

III. GENERAL CONDITIONS FOR THE AGREEMENT ABOVE

A. CONTRACTOR’S DUTIES
Contractor acknowledges and accepts the relationship of trust implicit in
this Construction Agreement. Contractor agrees to use good efforts,
judgment, and skills to complete the work according to the Contract
Documents referred to in this Agreement. Contractor agrees to furnish
competent construction management and administration and to
adequately supervise the work in progress. Contractor agrees to
complete the work in a timely and workmanlike manner.

_________ ________ ________

Contractor Owner Owner
Contractor represents and warrants the following to Owner:

1. Contractor is financially solvent.

2. Contractor is able to furnish the tools, materials, supplies, equipment,
and labor required to complete the work and perform his obligations
hereunder and has sufficient experience and skills to do so.
3. Contractor will employ only skilled and properly trained staff for the
performance of the work. Contractor will submit a “Rate Schedule for
Contractor’s Personnel” (see Section H below) which states the name
and total rate charged for each of his employees who works on this
project. Adjustments to the personnel on this list will be made by
Contractor on an as-needed basis and Owner will be informed of all such
changes.

B. CONTRACT DOCUMENTS
The Contract Documents consist of the following documents which are
hereby incorporated by reference into this Agreement:

1. This Agreement.
2. Any plans, specifications, or addenda referred to in the General Scope
of Work section above.
3. Other:

C. EXCLUSIONS
This Agreement does not include labor or materials for the following
work:

1. PROJECT-SPECIFIC EXCLUSIONS:

2. STANDARD EXCLUSIONS: Unless specifically included in the

“General Scope of Work” section above, this Agreement does not include
labor or materials for the following work: Plans, engineering fees, or
governmental permits and fees of any kind. Additional work required by
governmental plan checkers on final “Red Lined” Job Copy of plans that
are yet to be issued. Testing, removal and disposal of any materials
containing asbestos (or any other hazardous material as defined by the
EPA). Custom milling of any wood for use in project. Moving Owner’s
property around the site. Labor or materials required to repair or replace
any Owner-supplied materials. Repair of concealed underground utilities
not located on prints or physically staked out by Owner which are

_________ ________ ________

Contractor Owner Owner
damaged during construction. Surveying that may be required to
establish accurate property boundaries for setback purposes (fences and
old stakes may not be located on actual property lines). Final
construction cleaning (Contractor will leave site in “broom swept”
condition). Landscaping and irrigation work of any kind. Temporary
sanitation, power, or fencing. Removal of soils under house in order to
obtain 18 inches (or code-required height) of clear space between
bottom of joists and soil. Removal of filled ground or rock or any other
materials not removable by ordinary hand tools (unless heavy
equipment is specified in Scope of Work section above), correction of
existing out-of-plumb or out-of-level conditions in existing structure.
Correction of concealed substandard framing. Rerouting/removal of
vents, pipes, ducts, structural members, wiring or conduits, steel mesh
which may be discovered in the removal of walls or the cutting of
openings in walls. Removal and replacement of existing rot or insect
infestation. Failure of surrounding part of existing structure, despite
Contractor’s good faith efforts to minimize damage, such as plaster or
drywall cracking and popped nails in adjacent rooms or blockage of pipes
or plumbing fixtures caused by loosened rust within pipes; construction
of a continuously level foundation around structure (if lot is sloped more
than 6 inches from front to back or side to side, Contractor will step the
foundation in accordance with the slope of the lot). Exact matching of
existing finishes. Public or private utility connection fees. Repair of
damage to roadways, driveways, or sidewalks that could occur when
construction equipment and vehicles are being used in the normal course
of construction. Cost of correcting errors and omissions by the owner’s
design professionals and separate contractors. Cost of
correcting/testing/remediating mold/fungus/mildew and organic
pathogens unless caused by the sole and active negligence of contractor
as a direct result of a construction defect that caused sudden and
significant water infiltration into a part of the structure. Cost of removing
ponding ground water or other unusual concealed site conditions during
excavation. Extra costs associated with refusal of caisson drilling, cave-
ins, etc. Cost to modify and/or remanufacture custom brackets and other
custom-fabricated materials that are manufactured per plans and/or
specifications but do not fit properly into the structure.

3. FEES FOR BUILDING PERMITS, PLANS, ENGINEERING &

ARCHITECTURAL SERVICES, UTILITY CONNECTIONS, AND
SPECIAL TESTING: This Agreement does not include the cost of
coordinating or submitting for the permits, fees, and services referred to
above. If Owner requests Contractor to coordinate any of these services

_________ ________ ________

Contractor Owner Owner
or obtain any of the permits above, Contractor will perform this work on
an hourly basis at the hourly rate of: PHP___________

Owner (not Contractor) is to enter into contracts for all of the above-
mentioned services and provide direct payment to the people or
agencies contracted with for all of the services and permit fees in the
paragraph above.

If Owner requests that Contractor meet with Owner and architect or

other design professionals to review the construction plans and
specifications prior to completion of the final design documents,
Contractor will perform this work on an hourly basis at the hourly rate
of: PHP____________

D. DATE OF WORK COMMENCEMENT AND SUBSTANTIAL

COMPLETION
Commence work:____________________. Construction time through
substantial completion: Approximately ___ to ___ weeks/months, not
including delays and adjustments for delays caused by: holidays;
inclement weather; accidents; shortage of labor or material; additional
time required for Change Order and Additional Work; delays caused by
Owner, Owner’s design professionals, agents, and separate contractors;
and other delays unavoidable or beyond the control of the Contractor.

E. EXPIRATION OF THIS AGREEMENT

This Agreement will expire 15 days after the date at the top of page one
of this Agreement if not accepted in writing by Owner and returned to
Contractor within that time.

F. CONTRACTOR’S FEE
Owner will pay Contractor the Contract Sum consisting of the Cost of the
Work as defined in Section H of this Agreement, plus a fixed percentage
fee of ___% of the cost of all work as compensation for Contractor’s
profit and overhead.

G. PROGRESS PAYMENTS
Based upon applications for payment and all supporting documentation
submitted to Owner by Contractor on Thursday of: ___ every week /
___every other week, Owner shall make a progress payment to
Contractor as provided below on the following Friday of every week (the
next day). The amount of each progress payment shall be calculated as
follows and paid on or before the Friday following the date on which
Contractor submitted the payment request/invoice:

_________ ________ ________

Contractor Owner Owner
Add up the total Cost of the Work as defined in Section H below, which
has been performed during the payment period, add the appropriate
percentage of Contractor’s Fee, and the total of these two amounts will
be due each Friday to Contractor.

H. COSTS TO BE REIMBURSED
Owner shall reimburse Contractor the Cost of the Work. The term “Cost
of the Work” shall mean costs necessarily incurred by Contractor in good
faith and in the proper performance of the work. The Cost of the Work
shall include the items set forth in this section.

1. LABOR COSTS: Construction workers directly employed by

Contractor to perform the construction work (“In-House Labor”) will be
paid as established by the Rate Schedule for Contractor’s Personnel set
forth below. This rate schedule is the gross amount to be charged for
each worker (any and all applicable labor burden, medical and
retirement benefits, bonuses, etc. have been factored into these rates).

RATE SCHEDULE FOR CONTRACTOR’S PERSONNEL

WORKER RATE

A. ________________________________: PHP______ PER HR.

B. ________________________________: PHP______ PER HR.
C. ________________________________: PHP______ PER HR.
D. ________________________________: PHP______ PER HR.
E. ________________________________: PHP______ PER HR.
F. ________________________________: PHP______ PERHR.*

* Clerical time spent preparing payment applications.

2. CONTRACTOR’S SUPERVISORY PERSONNEL: When Contractor or

Contractor’s employee is performing both carpentry work and
supervisory work, there shall be no duplication of payment for such labor
(i.e., payment for both carpentry work and supervisory work at the same
time).

Owner will be billed for Contractor or Contractor’s supervisory personnel

performing off-site coordination activities or off-site job-related meetings
directly related to the progress of the work. This off-site time billed to
Owner shall not exceed ____ hours per week unless the off-site meeting

_________ ________ ________

Contractor Owner Owner
is requested by Owner, or otherwise as agreed to in writing by Owner
and Contractor.

All accounting work and documentation preparation in connection with

payment applications is a direct job cost which will be performed at the
rate of PHP____ per hour. Accounting and document preparation work is
guaranteed not to exceed ____ hours per payment application.

3. COST OF TIME SPENT PICKING UP MATERIALS AND

MOBILIZING JOB: Time spent by Contractor and his employees at
lumberyards and material supply houses (including travel time to and
from) to pick up materials, and time required to move tools and
equipment onto the job site at the start of the project and away from the
site at the end of the project, is part of the Cost of Work.

4. SUBCONTRACT COSTS: Payments made to Subcontractors to

properly advance the project work is part of the Cost of Work for the
project.

5. COST OF MATERIALS INCORPORATED INTO THE PROJECT: The

cost of materials and equipment (and applicable sales tax, freight, or
delivery charges) incorporated into the completed project is part of the
Cost of the Work for the project. Any unused, excess materials shall be
returned to the supplier for a credit. This credit will be issued to Owner
along with the next billing by Contractor. Minor waste of materials is
typical for every construction project and is considered a part of the Cost
of the Work.

6. COSTS OF OTHER MATERIALS, EQUIPMENT, TEMPORARY

EQUIPMENT, TAXES, SECURITY, AND RELATED ITEMS:
a. The cost of temporary fencing, temporary sanitation, monthly utility
fees paid directly by Contractor, and rental equipment, including the
costs of transporting and installing the equipment (if required).
b. The cost of consumable supplies which are consumed during the
course of the project, e.g., circular saw blades, chalk, string line,
reciprocating saw blades, wood stakes, forming lumber, pencils, etc.).
No power tools or capital equipment will be paid for by Owner. Upon
request by Owner, leftover consumable supplies will become the
property of Owner at the end of the project.
c. Costs of removal of debris from the site, and hauling and dump fees.
d. Phone company charges for business-related phone calls.
e. The cost of all taxes on the project itself imposed by local, state, or
federal agencies related to the work (not including taxes on employees

_________ ________ ________

Contractor Owner Owner
and subcontractors which have already been factored by Contractor into
the labor rates above).
f. Security costs required by Owner or deemed essential by Contractor.

7. EMERGENCY REPAIRS AND PRECAUTIONS: The Cost of the Work

shall also include any actions taken in case of an emergency to prevent
threatened damage, injury or loss to persons and property on the job
site.

I. COSTS NOT TO BE REIMBURSED

The Cost of Work shall not include:

1. Any general insurance costs and state and federal taxes of Contractor
(e.g., worker’s compensation, comprehensive general liability insurance,
auto insurance, health insurance, or labor burden expenses such as state
and federal employer taxes, etc.). Contractor has factored these costs
into the Rate Schedule for Contractor’s Personnel in Section III.H.1,
above, or these costs will be paid out of Contractor’s profit and overhead
percentage.
2. Travel time to and from the job site for Contractor and his employees.
Costs associated with travel time such as: gas, vehicle maintenance,
mileage payments, vehicle insurance, etc.
3. Costs to purchase, repair, and maintain Contractor’s tools, vehicles,
and equipment.
4. Cellular phone charges (unless specifically agreed to in writing by
Owner and Contractor).

J. SUBCONTRACTS AND OTHER AGREEMENTS

Any portions of the work that Contractor chooses to subcontract shall be
performed under appropriate agreements with Contractor.

Contractor will allow only skilled Subcontractors who are properly

licensed, bonded, and insured in accordance with the terms of this
Agreement to perform work on this project.

K. ACCOUNTING RECORDS
Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for detailed and responsible financial
management of all aspects of this Agreement.

L. WORK PERFORMED BY OWNER OR OWNER’S SEPARATE

CONTRACTORS AND MATERIALS FURNISHED BY OWNER

_________ ________ ________

Contractor Owner Owner
Contractor to supervise, coordinate, and charge profit and overhead at
the rate of ____% on all of the following: all Owner-furnished materials
and the cost of the work of Owner’s separate contractors who are
working on-site at same time as Contractor (any time in between when
Contractor has commenced work and when the work is 100% complete
by Contractor).

Exceptions to the Contractor charging profit and overhead on Owner-

supplied materials and Owner’s separate contractors are strictly limited
to the following:

M. CHANGES IN WORK AND ADDITIONAL CONTRACTOR’S FEE

During the course of the work, Owner may request Contractor to
perform Additional Work. Owner may also alter the selection of products
or building design. All such changes in the work will be performed by
Contractor according to the terms and conditions in this Agreement.

In addition, Contractor will charge profit and overhead — either at the

rate set in this Agreement or at the rate of ___% — on all
Subcontractors designated by Owner to work on the project up until the
point in time when Contractor has completed all of his work under this
Agreement.

N. MISCELLANEOUS CONDITIONS

1. OWNER COORDINATION WITH CONTRACTOR: Owner agrees to

promptly furnish Contractor with all details and decisions about
unspecified construction finishes, and to consent to or deny changes in
the Scope of Work that may arise so as not to delay the progress of the
Work. The cost of any delays in furnishing design decisions after
construction has commenced will increase the contract amount
consistent with any additional costs incurred by Contractor. Delays in
furnishing design decisions after construction has commenced will also
increase the contract time. Owner agrees to furnish Contractor with
continual access to the job site.

2. INTEREST CHARGES: Interest in the amount of ____% per month

will be charged on all late payments under this Agreement. “Late
Payments” are defined as any payment not received within _____ days
of receipt of invoice from Contractor.

3. CONTRACTOR NOT TO BE RELIED UPON AS ARCHITECT,

ENGINEER, OR DESIGNER: Contractor is not an architect, engineer, or

_________ ________ ________

Contractor Owner Owner
designer. Contractor is not being hired to perform any of these services.
To the extent that Contractor makes any suggestions in these areas,
Owner acknowledges and agrees that Contractor’s suggestions are
merely options that Owner may want to review with the appropriate
design professional for consideration. Contractor’s suggestions are not a
substitute for professional engineering, architectural, or design services,
and are not to be relied on as such by Owner. Contractor is not
responsible for ascertaining whether details in Owner’s plans conform to
all applicable building and planning codes. Contractor is not responsible
for the cost of correcting errors and omissions by Owner’s design
professionals and separate contractors.

4. LIEN RELEASES: Upon request of Owner, Contractor and

subcontractors will issue appropriate lien releases prior to receiving final
payment from Owner.

O. WORK STOPPAGE AND TERMINATION OF CONTRACT FOR

DEFAULT
Contractor shall have the right to stop all work on the project and keep
the job idle if payments are not made to Contractor strictly in
accordance with the Payment Schedule in this Agreement, or if Owner
repeatedly fails or refuses to furnish Contractor with access to the job
site and/or product selections or information necessary for the
advancement of Contractor’s work. Simultaneous with stopping work on
the project, Contractor must give Owner written notice of the nature of
Owner’s material breach of this Agreement and must also give Owner a
14-day period in which to cure this breach of contract. Owner to follow
this same notice procedure with Contractor if Owner alleges Contractor is
in material breach of this Agreement.

If work is stopped due to any of the above reasons (or for any other
material breach of contract by Owner) for a period of 14 days and Owner
has failed to take significant steps to cure his default, then Contractor
may — without prejudicing any other remedies Contractor may have —
give written notice of termination of the Agreement to Owner and
demand payment for all completed work and materials ordered through
the date of work stoppage and any other reasonable loss sustained by
Contractor, including Contractor’s Profit and Overhead at the rate of
____% on the balance of the incomplete work under the Agreement.
Thereafter, Contractor is relieved from all other contractual duties,
including all Punch List and warranty work.

P. DISPUTE RESOLUTION AND ATTORNEY’S FEES

_________ ________ ________

Contractor Owner Owner
Any controversy or claim arising out of or related to this Agreement
involving an amount less than PHP (or the maximum limit of the
Small Claims court) must be heard in the Small Claims Division of the
Municipal Court in the county where the Contractor’s office is located.
Any dispute over the dollar limit of the Small Claims Court arising out of
this Agreement shall be submitted to an experienced private
construction arbitrator that shall be mutually selected by the parties to
conduct a binding arbitration in accordance with the arbitration laws of
the state where the project is located. The arbitrator shall be either a
licensed attorney or retired judge who is familiar with construction law.
If the parties can not mutually agree on an arbitrator within 30 days of
written demand for arbitration, then either of the parties shall submit the
dispute to binding arbitration before the American Arbitration Association
in accordance with the Construction Industry Rules of the American
Arbitration Association then in effect. Judgment upon the award may be
entered in any Court having jurisdiction thereof.

The prevailing party in any legal proceeding related to this Agreement

shall be entitled to payment of reasonable attorney’s fees, costs, and
post-judgment interest at the legal rate.

Q. INSURANCE
Owner shall pay for and maintain “Course of Construction” or “Builder’s
Risk” or any other insurance that provides the same type of coverage to
the Contractor’s work in progress during the course of the project. It is
Owner’s express responsibility to insure dwelling and all work in progress
against all damage caused by fire and Acts of God such as earthquakes,
floods, etc.

R. WARRANTY
Thank you for choosing our company to perform this work for you. Your
satisfaction with our work is a high priority for us, however, not all
possible complaints are covered by our warranty. Contractor does
provide a limited warranty against material defects on all Contractor-
and subcontractor-supplied labor and materials used in this project for a
period of one year following Substantial Completion of all work. This
warranty covers normal usage only. You must contact the Contractor at
the address on page one of this Agreement in writing for warranty
service immediately upon discovering an item in need of warranty
service. If the matter is urgent, you must also call the Contractor and
send written notice of the need for warranty service. Failure to notify the
Contractor of the need for warranty service within ten days of discovery
of a warranty item may void this warranty. Additionally, Owner’s hiring

_________ ________ ________

Contractor Owner Owner
of others or direct actions by Owner or Owner’s separate contractors to
repair a warranty item are not covered by this warranty and will not be
reimbursed by Contractor.

No warranty is provided by Contractor on any materials furnished by the

Owner for installation. No warranty is provided on any existing materials
that are moved and/or reinstalled by the Contractor within the dwelling
or the property (including any warranty that existing/used materials will
not be damaged during the removal and reinstallation process). One
year after Substantial Completion of the project, the Owner’s sole
remedy (for materials and labor) on all materials that are covered by a
manufacturer’s warranty is strictly with the manufacturer, not with the
Contractor.

Repair of the following items and related damages of every kind are
specifically excluded from Contractor’s warranty: problems caused by
lack of Owner maintenance; problems caused by Owner abuse, Owner
misuse, vandalism, Owner modification, or alteration; and ordinary wear
and tear. Damages resulting from mold, fungus, and other organic
pathogens are excluded from this warranty unless caused by the sole
and active negligence of contractor as a direct result of a construction
defect which caused sudden and significant amounts of water infiltration
into a part of the structure. Deviations that arise such as the minor
cracking of concrete, stucco, and plaster; minor stress fractures in
drywall due to the curing of lumber; warping and deflection of wood;
shrinking/cracking of grouts and caulking; fading of paints and finishes
exposed to sunlight are all typical (not material) defects in construction
and are strictly excluded from Contractor’s warranty.

THE EXPRESS WARRANTIES CONTAINED HEREIN ARE IN LIEU OF

ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTIES OF MERCHANTABILITY, HABITABILITY, OR
FITNESS FOR A PARTICULAR USE OR PURPOSE. THIS LIMITED
WARRANTY EXCLUDES CONSEQUENTIAL, INCIDENTAL, AND
SPECIAL DAMAGES AND LIMITS THE DURATION OF IMPLIED
WARRANTIES TO THE FULLEST EXTENT PERMISSIBLE UNDER
STATE AND FEDERAL LAW. SOME STATES RESTRICT
LIMITATIONS ON VARIOUS WARRANTIES AND SO A CONSUMER’S
RIGHTS UNDER THIS WARRANTY MAY VARY. THIS LIMITED
WARRANTY MAY NOT BE VERBALLY MODIFIED BY ANY PERSON.
THIS LIMITED WARRANTY IS GOVERNED BY THE LAWS OF THE
STATE WHERE THE WORK WAS PERFORMED.

_________ ________ ________

Contractor Owner Owner
S. ENTIRE AGREEMENT, SEVERABILITY, AND MODIFICATION
This Agreement represents and contains the entire agreement between
the parties. Prior discussions or verbal representations by the parties
that are not contained in this Agreement are not a part of this
Agreement.

T. ADDITIONAL LEGAL NOTICES REQUIRED BY STATE OR

FEDERAL LAW

See page(s) attached: ____ Yes; ____ No

U. ADDITIONAL TERMS AND CONDITIONS

See page(s) attached: ____ Yes; ____ No

I have read and understood, and I agree to, all of the terms and
conditions in the Agreement above.

________ _______________________
DATE CONTRACTOR’S SIGNATURE

________ _______________________
DATE OWNER’S SIGNATURE

________ _______________________
DATE OWNER’S SIGNATURE

_________ ________ ________

Contractor Owner Owner