These contracts are one in which the Gunnison Valley RTA does not contract for the performance of a specified amount of work for a predetermined price, but agrees instead to pay the contractor’s reasonable, allocable and allowable costs of performance regardless of whether the work is completed. The Gunnison Valley RTA/Department assumes a high risk of incurring cost overruns, while the contractor has almost no risk of financial losses.
Cost-type contracts are suitable when (a) you are unable to accurately describe the work to be done, or (b) there is an inability to accurately estimate the costs of performance. If either of these conditions is present, the cost-reimbursement contract is the proper type of contract.
Cost-type contracts are ideally suited to complex requirements because the parties can devote their attention to accomplishing the work rather than on the claims process, which will be significant on larger, complex projects.
