Cost Reimbursable v/s T&M

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kmodi
Posts: 2
Joined: Sat Oct 17, 2020 11:54 pm

Cost Reimbursable v/s T&M

Tue Oct 20, 2020 4:37 pm

Hi All,

Seems like the below question has been a part of previous forums as well, but we do not have a clear answer for it. In a couple of previous forums, it was mentioned that this is not a good question. Kindly suggest.

What similarity exists between” cost-reimbursable” and “time and material” types of contract?
  • a. They have no definitive end.
    b. The closure date is part of the contract.
    c. Both recommend fixing the cost upfront.
    d. In both buyer pay, the actual expense occurred by the seller.
Source - iZenBridge Post Chapter Questions (Project Procurement Management)

Answer: The right answer mentioned is "a". Shouldn't the answer to this question be "d" since in both cost re-imbursable and T&M, it is the buyer who is responsible to pay the actual expenses incurred by the seller?
kashyap35
Beginner
Beginner
Posts: 26
Joined: Mon Oct 05, 2020 2:37 pm

Re: Cost Reimbursable v/s T&M

Sun Oct 25, 2020 12:59 am

In Time and Material, the per hour cost charged by the vendor has the employee direct cost and some profit margin (unknown amount), so it can't be said - this is the actual cost incurred by the vendor.

While in Cost-Reimbursable it is actual cost plus a fixed known pre-defined amount for fees.

The option A is best suited
kmodi
Posts: 2
Joined: Sat Oct 17, 2020 11:54 pm

Re: Cost Reimbursable v/s T&M

Sat Oct 31, 2020 10:21 am

OK great - thanks a lot Kashyap for clarifying.

Regards,
Karan.

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