Contracts & ExecutionQuestion 182 of 1632
In a cost-plus contract, the party who bears the MOST risk of cost overruns is the:
a.Owner
b.Subcontractor
c.Contractor
d.Materials supplier
Explanation
Under cost-plus, the contractor is reimbursed for actual costs plus a fee, so cost increases are passed through to the owner. The owner therefore bears the bulk of the cost-overrun risk.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)