Contracts reimbursable cost schedule

On the other end of the spectrum, a reimbursable contract, whether competitive or negotiated, requires minimum bidding effort by both parties but leaves most of the risk on the Owner s shoulders. Between these two extremes, there are several options and combinations which, if discretely managed, could optimize bidding costs and schedule and result in an equitable sharing of risks. The best of all worlds would be to have ... 

This schedule is applicable only in cost reimbursable contracts and must clearly identify the cost items that will be reimbursed to the contractor under the terms of the contract. It would be to the Owner s advantage to include the following clauses ... 

Conversely, on a reimbursable-plus-percent-fee contract, the contractor could overstaff and/or pay overtime in the name of schedule compliance. The result would be an increase in contractor s cash flow and profits but the improvement in the schedule, if any, may not justify the extra cost to the client. However, this situation would be avoided with a clause requiring prior client s approval to premium pay and staffing the job beyond the approved plan. 

The CM provides managerial services and acts as the owner s agent in construction matters. Rather than the owner contracting with a single GC, he contracts directly with multiple prime contractors and specialty subcontractors. The construction manager schedules, coordinates, and directs the day-to-day activities of these contractors. He generally does not perform any work himself, but he may provide essential services normally included in a GC s overhead cost, such as temporary facilities, utilities, cleanup, and security. These services are provided on a cost-reimbursement basis and are not part of the CM s fee. 

The basic forms of contract to consider are lump-sum, remeasurable, and reimbursable. In reimbursable contracts, pa5onent is based on the contractor s inputs, essentially independent from any measure of the work output. The inputs may be based on a measure of actual costs (always rather hard to determine in the case of overheads) or on contract rates per category of input, such as per manhour for various skills and per week for construction equipment, with perhaps a separate overhead percentage. Clearly there is not much incentive for efficiency here, although bonus pa5onents based on performance can be offered (with substantial complications). It is difficult to choose the most cost-effective contractor, and to understand what unit of output will correspond to a unit of input and how much effort will be made to complete the work on schedule. This contract basis is therefore normally reserved for small works, where the contractor can be replaced if ineffective, or for when the nature of the project makes it difficult to define sufficiently accurately the work description at the time that the work must be contracted. 

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