Identifying The Risk In Cost Reimbursable Contracts: An Analysis of Risky Clauses in Industrial Construction Contracts

The primary goal of this book is to assess risk elements in cost reimbursable contracts. There is a notion that these contract types serve little risk to a contractor. Nine total contracts were read and, using a standard definition for risk; risky clauses were selected and evaluated. The contracts were all from large industrial projects. The clauses analyzed were broken down into smaller categories such as entitlement and rights and responsibility. The clauses were then ranked as low risk, intermediate risk and a high risk. Stripping all superfluous language from the clause, specific risk factors were identified for each category. This provided a table where risk factors and level of risk were shown, which allows for comparison to any contract when assessing contractual risk. DISCLAIMER: THIS IS NOT A LEGAL GUIDE AND DOES NOT PROVIDE ANY LEGAL ADVICE TO ANYONE UNDER ANY CIRCUMSTANCE. FOR EDUCATIONAL PURPOSES ONLY.