Agreement Cost Definition

A construction company is responsible for the construction of a commercial building worth $US 30 million. The contract, which is in addition to the fixed costs, stipulates that the building cannot exceed $34 million. According to the contract, the profit of the construction company is 15 percent of the total contract price (4.5 million $US). They can leave the final costs in the air, as they cannot be predetermined. ABC must provide dated receipts for all expenses and the client will check the quality of the job to verify that certain components, such as plumbing, electricity, faucets, etc., are well defined. The contract allows ABC to generate direct costs such as equipment, labor and costs related to hiring subcontractors. ABC may also charge indirect or indirect costs, including insurance, security and security.