USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
Cost-Plus Under a cost-plus pricing structure, the general contractor is reimbursed for the costs of the pro - ject, plus a percentage above cost. Cost-plus pricing structures are typically used when the scope of the project is unclear, or if numerous project changes are anticipated. Time and Materials This structure is typically used for small projects and where the amount of work is unclear. The general contractor is paid for the actual cost of labour and materials, plus an additional fee or percentage for the general contractor’s profit. Unit Price This cost structure is typically used for projects with repetitive units of work (eg, roads or utili - ties), but it can also be used for apartment devel - opment or the development of a housing project of similar homes or structures. The general con - tractor may be paid based on a square footage or “per unit” basis. Guaranteed Maximum Price This cost structure is typically used for well- defined projects, and it provides certainty for the owner while incentivising the contractor to man - age costs efficiently. Under this pricing structure, the general contractor agrees to be reimbursed for the actual cost of the project, plus the general contractor’s profit, up to a maximum “capped” price. 7.2 Assigning Responsibility for the Design and Construction of a Project Responsibility for design and construction of a project can be handled in a variety of ways, but the following methods are most common.
(to find out whether the landlord has re-let the premises). Landlords are often precluded from using “self-help” to evict tenants (for example, by locking the tenant out), as opposed to going through the court eviction process. Self-help evictions are illegal in most states and usually result in a lawsuit by the tenant. Landlords who engage in self-help evictions can face damages, fines, criminal charges, and possibly jail time. As discussed in 6.8 Costs Payable by a Ten- ant at the Start of a Lease , landlords typically require tenants to tender a security deposit (usu - ally “cash” , but sometimes a letter of credit is utilised) when the lease is being entered into, in order to protect the landlord against a tenant’s failure to meet its obligations, including the pay - ment of rent and additional rent. The amount of the security deposit is usually negotiable, but not always, and it often ranges between two to six times the monthly base rent. Often, the amount of security increases as the rent increases over the term of the lease, but in some leases tenants are able to negotiate for the security to decrease over time. 7. Construction 7.1 Common Structures Used to Price Construction Projects Various structures are used to price construction projects. They include the following. Fixed Price General contractors may agree to complete the project for a predetermined fixed price, regard - less of any additional costs or changes to the work. Construction lenders like to see fixed- price contracts as a part of the properties they are financing.
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