TCO C Compare and contrast a costplus contract to a time and

(TCO C) Compare and contrast a cost-plus contract to a time and materials contract. When would each be appropriate for a given project? (Points : 30)

Solution

A cost-plus contract gives the owner labor\'s promise to fix prevailing wage rate for each material at cost then adds a mark-up usually as percentage. A cost-plus contract allows an owner to throw in all kind of charges.

In material contract, the rate is usually pre-agreed between owner and labor. Time and material fixed a rate of labor and other expenditure.

Time and material is rarely used when no other type of cost justifies whereas cost-plus can be used when vendor is a non-profit entity and expects a substantial compensating benefits.