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What Is An Open Book Agreement

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The project is then invoiced to the customer on the basis of the actual costs incurred plus the agreed margin. This is essentially the same as what is called (especially in the United States) the cost-plus contract. Competition allows for « rules-based » bargaining that does not rely on open-book breakdowns to arrive at a good market price, as the multilateral negotiation process requires suppliers to honestly declare their market price. You can find more information about this process here and here. Therefore, there is still value to be gained by creating better insights into the complications and pitfalls that can arise when a company manages open-book contracts with its suppliers.