A cost reimbursable contract with a percentage fee pays the contractor for costs plus a percentage of the costs, such as 5 percent of total allowable costs. The contractor is reimbursed for allowable costs and is paid a fee.
Percentage Fee to Evaluate Dam in West Virginia
A small community in West Virginia was worried about the structural integrity of a dam above the town. The county council was worried the dam would break and cause loss of life and property. They contracted with a civil engineering firm to evaluate the dam structure and attest to the structural soundness. The firm hired an expert from outside the area and paid the expert $1,000.00 per day plus expenses such as meals, travel, and lodging. The civil engineering firm billed the community for the expert’s fees and expenses plus 10 percent of the total.
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