In which type of construction contract are actual costs plus a fee often discussed?

In cost-plus percentage contracts, the contractor is reimbursed for all legitimate expenses incurred during the project plus an additional amount as a fee, which is usually a percentage of the total costs. This type of arrangement facilitates a collaborative approach between the contractor and the client, as the contractor is incentivized to manage costs effectively while ensuring quality work. This structure is beneficial in situations where project specifications are not fully defined at the outset, allowing for flexibility as the project evolves. The fee component ensures the contractor is compensated for their overhead and profit while also encouraging efficiency in cost management.

In contrast, fixed price contracts commit the contractor to a set fee regardless of actual costs, which can lead to cost overruns or savings that do not directly benefit the client. Lump sum contracts also agree on a total price before the project begins, and design-build contracts streamline the delivery by combining design and construction services, but they don't typically include the cost-plus model.