What is Cost-Reimbursable Contract?

A Cost Reimbursable contract is analogous to a flexible bill for a service. Consider hiring someone to complete a work but not knowing how much it would cost because things may change along the way. So you agree to pay the real cost of the work plus a service charge. It’s like to stating, “I’ll pay you for what you spend on materials and work hours, and on top of that, I’ll give you an extra amount for your effort.” This sort of contract is useful when project specifications are anticipated to alter, providing for greater cost flexibility.