Cost reimbursable meaning

Verein für Konsumenteninformation v Koninklijke Luchtvaart Maatschappij NV., Case C-45/24, ECLI:EU:C:2026:2 What are the practical implications of this case? Up to now, airlines have typically maintained that when a ticket is refunded owing to a cancellation or a delay exceeding five hours, any commission levied by an intermediary, such as a travel agent at the time of booking, falls outside the reimbursable sum. Carriers generally do not know the commission figure and do not receive it as part of the fare revenue. Such commission is usually neither disclosed to the airline nor remitted with the ticket proceeds. This judgment confirms that, where a carrier is obliged to return the ticket price following a cancellation (or a long delay beyond five hours), the repayment must also cover the intermediary’s commission, even if the carrier does not know the amount involved. That position holds irrespective of the carrier’s knowledge of the figure at any point. As a result of this outcome, airlines will need to liaise with agents to determine...

This practice note addresses the 2nd Edition of the Burgundy Book, released in 2013, with particular emphasis on its role as a target cost form. In line with all IChemE agreements, the Burgundy Book contains thorough requirements for testing at completion and for commissioning, making it especially well suited to process engineering sectors such as nuclear, water, petrochemicals, and food. The suite adopts an almost entirely uniform structure across clauses, presentation and schedules. Departure from the standard drafting occurs only where needed to set out the mechanism delivering the risk/reward regime—in this instance, remuneration on a target cost footing. See also Practice Notes: IChemE Conditions 5th Edition—‘Red Book’ and IChemE Conditions ‘Green Book’ 4th Edition. Nature of Target Cost Contracts Target cost denotes that the contractor receives payment of the ‘actual cost’ it incurs (as defined), akin to a reimbursable arrangement but constrained by an agreed target cost. Where the actual cost surpasses the target, any additional sum payable to the contractor is reduced—often to nil. If the...

What is a prime cost contract? Put simply, where a deal is let on a ‘prime cost’ basis, the contractor recovers the expenditure it incurs in delivering the works — such as labour and materials (including those supplied by sub‑contractors) — plus a management fee on top to cover overheads and profit. This differs from the usual lump sum arrangement, under which the employer and contractor fix the total contract price payable to the contractor at the outset (subject to any clauses permitting adjustments as the works proceed) and the contractor bears the risk of any rise in the cost of the works. Management contracting is a common setting for prime costs in practice. The management contractor is remunerated with a fee for its services plus the prime costs it incurs in performing its functions. Those costs include amounts paid to the works contractors for the works they carry out. See Practice Note: Management contracting. A prime cost arrangement is generally viewed as equivalent to a ‘cost plus’...

What is a target cost contract? A target cost contract is a form of cost-reimbursable agreement where the contractor is reimbursed the ‘actual cost’ (as typically set out in the specific contract) it incurs in delivering the works, but this is capped by a target cost agreed by the parties at the outset of the scheme and set at the start of the project. The target cost reflects the contractor’s anticipated cost of completing the project, made up of: the basic cost of the physical works (derived from a bill of quantities, schedule of rates or activity schedule), together with any necessary temporary works, sub-contractor charges and preliminary costs across the job overheads and profit a contingency covering the contractor’s risks under the contract On completion, the parties apply a formula/mechanism to determine whether there were savings and the job finished below the target cost, or whether there was an overrun and delivery exceeded the target, by reference to the agreed...