Which reimbursement methodology requires significant monitoring effort by the purchaser?

The reimbursement methodology that requires significant monitoring effort by the purchaser is the Time and Materials approach. This method involves reimbursing contractors based on the actual costs incurred for labor, materials, and overhead, as well as any associated expenses. Because the purchaser is paying for the time spent and materials used, substantial oversight is necessary to ensure that costs are justified and that the work being performed aligns with the agreed-upon terms.

Purchasers must keep close track of the hours worked and the materials utilized, which involves detailed documentation and frequent communication with the contractor. This monitoring is essential to prevent cost overruns and to verify that the services rendered are in line with the contract expectations. Consequently, the need for diligent oversight and record-keeping distinguishes this methodology from others that might have fixed costs or predetermined pricing structures, which generally do not require the same level of monitoring.