I am about to enter into my first cost plus fixed percentage contract. I have a few questions regarding exactly what I add my percentage on. I am contracting a new home. Would the garbage bin rental and disposal be an item I can add my percentage on? I was also wondering if my percentage is added before or after taxes? Thanks
Discussion Forum
Discussion Forum
Up Next
Video Shorts
Featured Story
Learn how to plan, fabricate, and install a chute to conveniently send your dirty clothes from an upstairs bathroom or hallway to your laundry room below.
Highlights
"I have learned so much thanks to the searchable articles on the FHB website. I can confidently say that I expect to be a life-long subscriber." - M.K.
Replies
You need to put together a list of what items are costs, and what items are not. That needs to be agreed between you and the owner, it needs to be very clearly laid out. You add your percentage to all costs, as far as I'm concerned.
If the owner balks, let him provide some items at his expense. Dumpster is one item that would qualify.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
luckyjeff when you say you're entering into your "first cost plus fixed percentage contract" do you have a particular contract form or format that you we're planning on using? Usually in the standard contract forms for CPFF that I seen they make an effort to define just what the Costs To Be Reimbursed (to which the fee is attached or applied to) and the Costs Not To Be Reimbursed are defined in some way. If you don't have a standard contract in hand you might want to pick up Gary Ransone's The Contractor's Legal Kit : The Complete User-Friendly Legal Guide for Home Builders and Remodelers. In the Cost plus Fixed fee Agreement that appears in it he has a section entitled Costs To Be Reimbursed that includes stuff like:
Then his agreement goes on to explain the Costs Not To Be Reimbursed which can be assumed to be covered by the FEE. Things like:
What makes the book so good is that in addition to the blank contract forms he has in it he also presents a sample one filled out that he then annotates and explains. That alone makes the book well worth the investment.
"Would the garbage bin rental and disposal be an item I can add my percentage on?"
Using the description I just described above the dumpster and the cost to empty it are direct job costs and would be subject to reimbursement and the fee.
"I was also wondering if my percentage is added before or after taxes?"
If you are talking about the taxes you get charged on materials or subcontracted labor servives you purchase the tax on them is again a direct job cost.
You had also better be get some insight too as to whether the labor you charge, your fee is subject to tax too. That varies in different states in the union so maybe you should ask your accountant on that one.
View Image
The garbage bin is a cost, right?
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
Everything is negotiable. Just get it in writing before you start.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt