Cost Reimbursable procurement category

Cost Reimbursable procurement is used where there is uncertainty as to project scope and design definition, or there are unknown or unquantifiable risks and complex interfaces to be managed that cannot be effectively priced or programmed on a lump sum or fixed price basis.

The Cost Reimbursable procurement category recognises that specific risks are allocated to the party best able to manage them.


Cost Reimbursable projects must be delivered in accordance with Cost Reimbursable Procurement Requirements and associated contracts, guidance and templates.

The Cost Reimbursable Procurement Requirements provide further information on implementing its specific procurement models.

Cost reimbursable procurement models

The three cost reimbursable procurement models are:

  1. Incentivised Target Cost (ITC) is a model that includes a development phase where the contractor develops a Target Outturn Cost and a delivery phase where the contractor proceeds on an open‑book basis where the State reimburses the contractor for actual incurred costs of performing the works and a percentage for corporate overhead and profit.
  2. Managing Contractor is a model where the delivery agency engages a managing contractor (MC) who is responsible for all aspects of project delivery, including managing the completion of design and construction documentation and tendering and awarding trade packages. 
  3. Alliance is a model where the delivery agency and non-owner participants (NOPs), comprising the contractor, designer and other contracted parties work together to design and construct a project.

Supporting deeds and guidance notes


For more information on the Incentivised Target Cost contract, please contact

Reviewed 20/09/2023
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