The process for defining and agreeing the Reimbursable Cost categories usually begins by the Owner undertaking an Establishment Audit of each NOP's relevant cost structure, as part of the selection process. Generally, the Owner will also engage an external Cost Auditor during project delivery to validate that the Reimbursable Costs claimed by the NOPs have been actually and reasonably incurred and that reimbursement is warranted. While this is a necessary and prudent requirement where public monies are involved, a Cost Auditor usually has an audit background and will only assess 'Were the costs actually incurred by the NOPs?' not 'Should the NOPs have incurred those costs?'. The Owner needs to be satisfied on both of these issues. It is also worthwhile for the Owner to have representatives with financial backgrounds embedded in the alliance to monitor these issues, in addition to the role performed by external auditors.
| Project close out-estimated versus actual Reimbursable Costs Certain Reimbursable Costs will not be known until project completion as it is sometimes administratively prohibitive to measure the costs progressively. Examples of this include staff costs (annual leave, training leave, bonuses, etc). In this case, it is common to include an estimate of the staff costs claimed progressively by the NOPs. It is important that these costs are externally audited on project completion to ensure the Owner pays the actual costs and not estimates. A monetary adjustment (upwards or downwards) can then be made to the NOPs' payment as necessary to reflect the outcome of the audit. |