Wednesday, 11 September 2019

5.4.1. WHAT IS A "LEVEL OF EFFORT" CONTRACT

A contract termed as "level of effort" is a type that has a procedure similar to cost reimbursement.  This contract requires the following:


  1. A specified level of effort performed over a period of time given by the contractor. This is only through general terms.
  2. The client pays the contractor a fixed amount.
This type of contract is usually negotatiated for study of a specified research or investigation and development area.

Payment under this contract is based on the effort extended and not on the results achieved.

This type of contract is used only when:

  1. There is no definite scope of work defined.
  2. An advance agreement is made on the required level of effort identified.
  3. It is assured that the intended result is impossible to achieve by expending less than the stipulated effort.

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