# Not To Exceed clause



## Johnlav

How do I write a contract with a "Not To Exceed" clause


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## griz

Write a detailed SOW and then state price not to exceed $***x.


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## Astrix

An example:


> The cost of the project as outlined in the scope of work that forms part of this contract shall not exceed the sum of $ _______ plus approved adjustments.


Depending on the type of work you do, and if your materials are special order or tend to go up and down in price depending on the season, you might want to consider adding an Escalation Clause. An example:


> The price of materials is estimated to be $ _____. Between the date of this contract and the delivery of materials to the project site, if the cost of materials increases by more than _____%, through no fault of the contractor, the price of materials under this agreement shall be equitably adjusted by an amount reasonably necessary to cover any such significant price increases. Such price increases shall be documented through quotes, invoices or receipts.
> 
> Where the delivery of materials under this agreement is delayed, through no fault of the contractor, as a result of shortage or unavailability, the contractor shall not be liable for any additional costs or damages associated with such delay(s).


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## AContractorWife

How do you determine your Not to Exceed price? Do you take the amount you estimate the job with cost and times it by 1.25, 1.50, 1.75, 2 or some other way?


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## ROVACON

AContractorWife said:


> How do you determine your Not to Exceed price? Do you take the amount you estimate the job with cost and times it by 1.25, 1.50, 1.75, 2 or some other way?


Typically NTE are based on a preset budget for a project or an allowance for a certain portion of the project.

I often set a NTE when pricing small electrical modifications during, let say a bathroom remodel. I know what my electrician charges per day so I do the math and tell the homeowner, "this is the electrical scope, NTE unless approved by a formal change order." Of course there is always fluff in there to try and avoid a change order and the homeowner likes to know what to budget a head of time.

At the end of the job, if its less then the NTE, they get a credit. If it ends up being more, its ok because they have already signed the change order.


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