Question

Would a contractor prefer a cost reimburseable contract or a fixed price contract? Why?

Answer 1

First of all...cost reimbursement contract is a contract where a contractor is paid for all of its allowed expenses to a set of limit, plus additional payment to allow for a profit. And fixed price contract provides for a price that is not subject to adjustment on the basis of the contractor's cost experience in the performing the contract.

So contractor would prefer reimbursement contract over fixed price contract. The contractor will receive reimbursement for all cost and still make profit but under fixed price contract, there is a risk that the cost will be greater than the price and thus the contractor will take loss.