Why is cost documentation important in a cost-plus contract?
Correct Answer
D) Payment depends on allowable reimbursable costs and fee under the contract.
Cost-plus payment requires records supporting allowable cost and fee.
Why This Is the Correct Answer
Cost-plus payment requires records supporting allowable cost and fee.
Why the Other Options Are Wrong
Option A: The contract price never uses cost records
In procurement and contracting, The contract price never uses cost records. is the wrong selection for Cost-plus audit trail: the choice would not get the project to Payment depends on allowable reimbursable costs and fee under the contract.
Option B: Treat bid alternates as the only cost-plus audit support
The trap in B is Only bid alternates matter. That selection is wrong because it leaves the work at an informal or incomplete stage, while Cost-plus audit trail requires Payment depends on allowable reimbursable costs and fee under the contract.; Cost-plus contracts require documentation of allowable costs.
Option C: Assume the owner has no right to audit cost-plus records
Choice C gives The owner cannot audit costs. Its specific error: it points to The owner cannot audit costs. but.
Memory Technique
Make cost-plus audit trail a purpose cue; if the choice changes the purpose, it cannot be Payment depends on allowable reimbursable costs and fee under the contract.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "Cost-plus contracts" to confirm that Cost-plus payment requires records supporting allowable cost and fee.
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