AACE International Exam CCP Topic 3 Question 11 Discussion

In a cost reimbursable contract, the contractor is reimbursed for all allowable costs incurred during the project, plus an additional fee (which could be a fixed fee or a percentage of costs). This contract type provides several advantages but also has its limitations.

Key Points:

Advantages of Cost Reimbursable Contracts:

Simpler Proposal Evaluation: The focus is on selecting the best contractor rather than the lowest bid, making the evaluation process simpler.

Flexibility in Dealing with Changes: This contract type allows for adjustments and changes as the project progresses.

Early Start: Work can begin quickly without needing a fully defined scope since costs are reimbursed.

Owner Control:

While cost reimbursable contracts offer flexibility, they do not inherently mean that the owner controls all aspects of the work. The contractor typically manages the execution of the project, while the owner retains control over the budget and major decisions.

Conclusion: The correct answer is D. Owner controls all aspects of the work because, in cost reimbursable contracts, the contractor has significant control over how the work is performed, while the owner mainly controls costs and high-level decisions.