The latest update to our Contractors Operations Manual, Navigating Cost-Plus Contracts: Understanding Profit Pockets and Negotiation Strategies, provides a guide to recognizing and understanding what a cost-plus contract is and how it differentiates from other contracts.
Several variations are commonly used in cost-plus contracts, including cost-plus percentage of cost, cost-plus fixed fee, cost-plus incentive fee, and guaranteed maximum price contracts. For contractors, the cost-plus contract provides the advantage of a guaranteed profit on its allowable costs.
Contents include:
- Profit Pockets
- Profit Pocket – General Conditions
- Profit Pocket – Staff Rates
- Profit Pocket – Contractors
- Profit Pocket – Capitalized vs. Operating Expenses
- Profit Pocket – Preconstruction Services
- Profit Pocket – Senior Management Involvement .
- Profit Pocket – Audit Safeguards
- Profit Pocket – Contract Conversion.
- Negotiations
- Identifying Underlying Concerns
- Nailing the Interview
- Preserving the Client Relationship During Negotiations
- Responding to Win-Lose Negotiators
- Creating Section Allies
- Tactics to Deal with Inexperienced Negotiators
- Closing the Negotiation Session – Packaging the Issues
- Enlarging The Pie And Getting More
- Concessions and Knowing When to Concede
- How to Recognize a Walk-Away Situation
- Establishing the Budget or Fee Envelope
- The Negotiation Sequences
To learn more, read the latest Contractors Operations Manual, Contractors Operations Manual, Navigating Cost-Plus Contracts: Understanding Profit Pockets and Negotiation Strategies.
For more information about cost-plus contractors or the Contractors Operations Manual, contact Mike McCullion, Director of Market Sectors and Safety, at mmccullion@smacna.org.