Cost-reimbursement contracts are most appropriate for projects that
A) take less than one year to complete.
B) are with customers that want a single payment date.
C) are well defined and entail little risk.
D) involve risk.

Question

Quizplus · Accepted Answer

Cost-reimbursement contracts are designed to transfer risk from the contractor to the customer. Therefore, they are most appropriate for projects that involve risk. These contracts are not suitable for projects that are well defined and entail little risk, as the customer would likely choose a fixed-price contract in that case. Additionally, the length of the project and the customer's desire for a single payment date are not major factors in determining the appropriateness of a cost-reimbursement contract.

Cost-Reimbursement Contracts Are Most Appropriate for Projects That