Contract, Open Book

Open book contracts are arrangements where the contractor is reimbursed their actual expenses, which are validated through allowing the client access to the contractor’s actual expenditure, the ‘open book’. The contractor may be allowed a fee on top of the allowable expenses, either a fixed fee or a percentage of the expenses. Open book approaches are appropriate when it is hard to scope the work and not appropriate or possible to transfer the risk to the contractor. Accordingly, some clients incorporate an incentive in cost-reimbursable contracts, to promote cost-sensitive behaviour. Open book contracts require some trust between client and contractor, so that the contractor is confident that the client will accept allowable expenses and not use access to the contractors actual cost information to renegotiate the terms. See also Contract and Cost Plus.

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With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.