What is a characteristic of a cost plus contract?

A cost plus contract is characterized by the builder's profit being based on actual construction costs. This means that the builder is reimbursed for all project costs incurred, which can include materials, labor, and overhead expenses, in addition to receiving a predetermined profit margin or fee. This arrangement allows for flexibility in project expenses, as the total cost can fluctuate based on actual spending during construction.

Such contracts are beneficial when the scope of work is not entirely defined at the outset, allowing for adjustments as the project progresses. This method incentivizes collaboration between the contractor and the client, as both parties share in the potential cost fluctuations.

The other options do not accurately describe the nature of a cost plus contract. Fixed profit characteristics, restrictions to governmental projects, and guaranteed completion time frames are not fundamental aspects of this contract type, which focuses on actual costs incurred rather than fixed rates or timelines.