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Describe and discuss when one should use a fixed price contract for a project. Compare and contrast this to an incentive fee contract and a cost plus contract.

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Solution Summary

This excerpt explains why a project manager should choose a fixed price contract over an incentive fee contract or a cost plus contract.

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Firm Fixed Price contracts are said to be some of the simplest and most common contracts used in project management. They are normally used in situations where "cost uncertainty is commercially within certain limits." The terms of these contracts state that the seller will supply goods or deliverables within an agreed upon time and amount in exchange for a lump sum of money. These types of contracts in particular work in favor of the buyer.

In addition to the Firm Fixed Price ...

Solution provided by:
Tamara Daniels, MS
Education
  • Master Online Teacher Certificate, University of Illinois
  • MS, National Louis University
  • MA, National Louis University
  • BA, University of Illinois
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