Case Study $2$: Cost$-$Plus$-$Fee Contract

A government agency in Malaysia has opted for a cost$-$plus$-$fee contract for the construction of a public infrastructure project. The project scope has expanded, leading to concerns about cost escalation.

Questions:

a$)$ Analyse the risk allocation between the client and the contractor in a cost$-$plus$-$fee contract, especially when dealing with scope changes.

b$)$ Evaluate strategies to manage and control costs effectively under a cost$-$plus$-$fee contract

c$)$ Discuss the regulatory and legal aspects associated with cost$-$plus$-$fee contracts in Malaysia and their implications for project stakeholders.

For both case studies and based on the questions above, provide well$-$reasoned and supported answers based on relevant laws, regulations, and industry practices in Malaysia. Reference specific clauses or provisions from standard contract templates used in Malaysia and include recommendations for improving contract management practices based on the lessons learned from each case study.