Overview
A Cost Plus contract (also called Cost-Plus or Time & Materials) is one of the most common pricing models in construction. Instead of billing a client a single fixed price for a project, you charge them for the actual costs you incur like materials, labor, subcontractors, equipment, and other expenses, plus an agreed-upon markup or fee for your overhead and profit. This model is ideal when the full scope of work is uncertain, the project is likely to change, or the client wants full transparency into what they're paying for.
In a Cost Plus arrangement, the client essentially reimburses you for every dollar spent on the project and pays an additional percentage or flat fee on top. This creates a trust-based relationship where the client can see exactly where their money goes, and you're protected from absorbing unexpected costs. It's especially popular in remodeling, custom home building, and projects with complex or evolving scopes.
Currently, Structur's invoicing system is designed around approved proposals and approved change orders. You can only invoice a client for amounts tied to an approved proposal or change order. You cannot directly invoice for subcontracts, bills, or expenses. This means managing a Cost Plus project in Structur requires a specific workflow to ensure all costs are captured, approved by the client, and invoiceable. This guide walks you through exactly how to do that.
Understanding Cost Plus Projects
What It Does
A Cost Plus workflow in Structur allows you and your team to:
Charge clients for actual project costs (materials, labor, subs, expenses) rather than a fixed lump sum
Add a markup or fee on top of costs to cover overhead and profit
Maintain full transparency by showing the client exactly what was spent and what the markup is
Adapt to scope changes without renegotiating the entire contract. New costs simply get added as they arise
Use proposals and change orders as the mechanism to capture, approve, and invoice every cost on the project
Keep your invoicing workflow consistent by routing all billable amounts through Structur's existing approval and invoicing system
When to Use It
Cost Plus is most valuable when you want to:
Bill a client for actual costs on projects where the scope is uncertain or evolving
Build trust with clients who want full visibility into how their money is being spent
Avoid the risk of losing money on a fixed-price bid when the project scope is unclear
Handle remodeling, custom homes, or renovation projects where surprises are common
Run Time & Materials (T&M) projects where you track real expenses and bill accordingly
How Cost Plus Contracts Work (Industry Overview)
Before diving into the Structur-specific workflow, it helps to understand how Cost Plus contracts work in the construction industry at large. There are several common variations:
Cost Plus Percentage Fee: The contractor charges all actual costs plus a fixed percentage (e.g., 15–20%) on top. The markup percentage is agreed upon before the project starts and applies to all costs equally.
Cost Plus Fixed Fee: The contractor charges all actual costs plus a predetermined flat fee for profit/overhead. The fee doesn't change regardless of final project cost, which gives the client more cost predictability.
Cost Plus with a Guaranteed Maximum Price (GMP): Similar to the above, but with a cap. The client pays actual costs plus the fee, but the total will never exceed an agreed-upon maximum. If costs come in under the GMP, the savings may be shared.
Time & Materials (T&M): A close cousin of Cost Plus. The client pays for labor at agreed hourly/daily rates plus the actual cost of materials. Common for smaller or maintenance-type projects.
In all cases, the core principle is the same: the client reimburses the contractor for actual costs incurred and pays an additional amount (percentage or flat fee) for the contractor's overhead and profit. The contractor is responsible for tracking and documenting every cost, and the client typically has the right to audit those costs.
Step-by-Step: Running a Cost Plus Project in Structur
1. Set Up the Project and Initial Proposal
Start by creating the project and an initial proposal that covers your service fee or initial scope:
Create the project in Structur as you normally would.
Navigate to Preconstruction > Proposals.
Create an initial proposal covering your base service fee, management fee, or any known fixed costs. This is the proposal that formally starts the project with your client.
Send the proposal to your client for approval.
Once approved, you can invoice for this initial amount.
Note: The initial proposal can include your agreed-upon markup structure (e.g., "15% management fee on all costs") in the description or terms so the client understands the billing model from the start.
2. Track Your Actual Costs
As the project progresses, you'll incur costs for materials, subcontractors, labor, equipment, and other expenses. Track all of these in Structur:
Subcontracts: Create and manage subcontracts under Financial Management.
Bills: Enter bills from vendors and suppliers.
Expenses: Log any project expenses (permits, rentals, miscellaneous).
Daily Logs & Timesheets: Use these to track labor hours for T&M-style billing.
Important: Currently, you cannot directly invoice clients for subcontracts, bills, or expenses in Structur. These cost entries are for your internal tracking and budget management. To bill the client for these costs, you'll need to create a change order (see Step 3).
3. Create a Proposal or Change Order for Each Cost Batch
This is the key step that makes Cost Plus work in Structur. Since invoicing requires an approved proposal or change order, you'll need to bundle your incurred costs into a new proposal or change order and send it to the client for approval.
Here's how:
Gather your costs. At an agreed-upon interval (weekly, biweekly, monthly), compile all the costs incurred since the last billing cycle. Subcontractor invoices, material bills, expenses, labor costs, etc.
Create a new Change Order (or Proposal). Navigate to the project's financial management section and create a new change order. Title it clearly, e.g., "Cost Plus Billing – March 2026" or "Week 12 Costs."
Itemize the costs. In the change order, list each cost as a line item. Include descriptions, amounts, and any supporting documentation. Add your agreed-upon markup (overhead + profit) as a separate line item or build it into each line.
Send for client approval. Send the change order to the client for review and approval. The client can see exactly what costs were incurred and what the markup is.
Once approved, invoice. After the client approves the change order, it becomes invoiceable. Create an invoice from the approved change order to bill the client.
Tip: Agree with your client upfront on how frequently you'll submit cost batches for approval. Monthly is the most common, but weekly or biweekly works well for fast-moving projects.
4. Invoice the Approved Change Order
Navigate to Financial Management > Invoicing.
Create a new invoice for the project.
Select the approved change order(s) you want to include on this invoice.
Review the invoice details and send it to the client.
Repeat this cycle for each billing period throughout the project.
5. Repeat for Each Billing Cycle
Continue this pattern throughout the project: track costs → bundle into a change order → get client approval → invoice. Each billing cycle creates a clear, approved record of what was spent and what the client owes.
Best Practices
Agree on billing frequency upfront - Set expectations with your client on how often you'll submit cost batches. Monthly is standard, but biweekly or weekly can work for fast-paced projects.
Keep detailed records of every cost - Attach receipts, invoices, and documentation to each bill, expense, and subcontract in Structur so you have backup if the client asks questions.
Name your change orders clearly - Use descriptive titles like "Cost Plus – April 2026 Costs" so both you and the client can easily identify each billing period.
Include your markup transparently - Show the markup as a separate line item on the change order so the client sees the actual costs and the fee separately. This builds trust.
Review your budget regularly - Use Structur's budget tools to compare actual costs against any estimates. Even on Cost Plus projects, tracking budget health helps you manage the project effectively.
Communicate proactively about large costs - If a major expense is coming (e.g., a large subcontractor invoice), give the client a heads-up before the change order arrives so there are no surprises.
Document your Cost Plus agreement clearly - Make sure your contract with the client spells out the markup percentage/fee, what costs are reimbursable, billing frequency, and the client's right to audit costs.
Common Questions
Q: Can I invoice a client directly for subcontracts, bills, or expenses?
A: Currently, no. Structur's invoicing system only allows you to invoice amounts tied to approved proposals or approved change orders. To bill for these costs, you'll need to create a change order that includes those amounts, get it approved, and then invoice against it.
Q: How do I add my markup to the costs?
A: When you create the change order for a billing period, add your markup as a separate line item (e.g., "Management Fee – 15%") or build the markup into each cost line. The first approach is more transparent and generally recommended for Cost Plus contracts.
Q: How often should I create change orders for costs?
A: This depends on your agreement with the client. Monthly is most common. For fast-moving projects, biweekly or weekly may be better. The key is to agree on a cadence with the client upfront and stick to it.
Q: What's the difference between a new proposal and a change order for Cost Plus billing?
A: Both work for this workflow. A change order is typically better because it's tied to the existing project and clearly represents an addition to the original scope/cost. Proposals are better for the initial agreement. Use change orders for ongoing cost billing.
Q: Can the client see the actual costs I incurred?
A: The client sees whatever you include in the change order. For Cost Plus transparency, it's best practice to itemize every cost so the client can review exactly what was spent. You can also attach supporting documentation (invoices, receipts) to the change order for full transparency.
Q: Will Structur add direct Cost Plus invoicing in the future?
A: The ability to invoice directly for subcontracts, bills, and expenses without requiring a change order is on the Structur roadmap. In the meantime, the change order workflow described in this article is the recommended approach.
Q: How do I handle a Guaranteed Maximum Price (GMP) in Structur?
A: Set up the initial proposal with the GMP amount noted in the description or terms. Then follow the same Cost Plus workflow—track costs, create change orders, and invoice. Use Structur's budget tools to monitor total costs against the GMP cap and ensure you don't exceed it.
Common Mistakes to Avoid
❌ Don't | ✅ Do |
Try to invoice directly from bills or expenses | Create a change order to capture those costs, then invoice from the approved change order |
Wait until the end of the project to bill all costs at once | Bill in regular intervals (monthly or biweekly) with separate change orders for each period |
Lump all costs into one vague line item on the change order | Itemize each cost clearly so the client can see exactly what they're paying for |
Forget to include your markup on the change order | Add your management fee or markup as a clear, separate line item on every cost change order |
Skip tracking costs in Structur because you'll bill them separately | Enter all subcontracts, bills, and expenses in Structur to maintain an accurate budget and cost history |
Assume the client knows how Cost Plus billing works | Explain the workflow upfront and agree on billing frequency, markup, and documentation expectations |