The cost at which the contractor assumes total responsibility for each additional dollar of contract cost is known as a(n) _____.

The cost at which the contractor assumes total responsibility for each additional dollar of contract cost is known as a cost-plus fee or cost-plus contract. In this type of agreement, the contractor is reimbursed for their expenses plus an additional amount (the fee) that typically covers profit. Essentially, the contractor bears the risk of cost overruns to a certain extent; however, because they are compensated for the total costs incurred, their responsibility increases directly with the costs.

This situation is common in scenarios where the precise scope and costs of a project are uncertain. Since the contractor is guaranteed to receive payment for all costs incurred, they have less financial risk compared to fixed-price contracts, where they are responsible for covering any overruns out of their profit margin. Understanding this concept is crucial for both contractors and clients to manage risks and expectations effectively in project management.