Contract Types

Question 1

What type on contracts does the Seller bear all risk?

Answer 1

Fixed Price

Question 2

FFP

Answer 2

Firm Fixed Price (most common, seller covers any cost increase)

Question 3

FPIF

Answer 3

Fixed Price Plus Incentive (includes and extra performance incentive)

Question 4

FP-EPA

Answer 4

Fixed Price with Economic Price Adjustment (used in long-term projects, buyer covers inflation costs)

Question 5

CPPC

Answer 5

Cost Plus Percentage of Costs (seller reimbursed for costs, plus a percentage commission)

Question 6

CPFF

Answer 6

Cost Plus Fixed Fee (seller reimbursed for costs, plus an fixed dollar commission)

Question 7

CPIF

Answer 7

Cost Plus Incentive Fee (seller reimbursed for costs, plus an objective bonus)

Question 8

CPAF

Answer 8

Cost Plus Award Fee (seller reimbursed for costs, plus a subjective bonus)

Question 9

T and M

Answer 9

Time and Material (hybrid, moderate risk to buyer, often used for staff augmentation and consultants)