Cost Of Completion Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Cost Of Completion, written in plain English, along with examples of how it is used.
What is Cost Of Completion?
When any project or contract is not completed on time the amount required to finish the task is called cost of completion.Example- if a building is not constructed as per the given time and is left incomplete the amount paid to the new builder to complete it is cost of completion.
History and Meaning of Cost Of Completion
The term "cost of completion" is typically used in construction projects, particularly those that have experienced delays or issues that have prevented them from being completed according to their original timeline. In such cases, the cost of completion refers to the amount of money required to finish the project.
The total cost of a project can include a range of different expenses, from labor and materials to permits and equipment rental fees. In many cases, the cost of completion will involve hiring a new contractor or team to finish the work, which can add significant costs to the project.
Examples of Cost of Completion
Here are a few examples of how the term "cost of completion" might be used in different contexts:
A homeowner hires a contractor to remodel their kitchen, with a set completion date and budget. However, the contractor runs into issues and the project ends up taking longer than expected. The cost of completion in this case would be the additional funds required to finish the project and bring it up to the homeowner's expectations.
A developer plans to build a new apartment complex, but runs into zoning issues that delay the project. The cost of completion would be the additional expenses required to meet the new zoning requirements and get the project back on track.
A small business owner hires a contractor to build a new storefront, but the contractor runs into financial trouble and can't finish the job. The cost of completion would involve finding a new contractor or team to complete the work, which could add significant costs to the project.
Legal Terms Similar to Cost of Completion
Liquidated damages - a sum of money that a party agrees to pay in case of a specific breach of contract, such as failure to complete a project on time.
Force majeure - unforeseeable circumstances that prevent a party from fulfilling their obligations under a contract, such as a natural disaster or act of war.
Time is of the essence - a clause in a contract that makes clear that time is a critical factor in completing the project or fulfilling obligations under the contract.