Contract type Flashcards
Firm Fixed Price (FFP)
A FFP is the most common type of fixed price contract. In an FFP contract that scope of the product or service should be exact. The price will he set on the buyer request.
Fixed Price Incentive Fee (FPIF)
A FPIF is similar to the FFP, however a FPIF also offers an incentive if the product or service exceeds an expectation.
Fixed price with economic price adjustment (FP-EPA)
A FP-EPA is like a FFP, with one exception, if the product or service is largely reliant on an input with a price that is governed by supply and demand, a seller could increase the price of the overall contract accordingly.
Cost Plus Fixed Fee (CPFF)
In a CPFF the seller can change the buyer for all legitimate expenses related to completing the product or service. However, the seller can also charge a fixed-fee that is a percentage of the overall contract price.
Remember this fixed fee is set at the beginning of the contract, and even if legitimate expenses increases this fixed fee remains the same.
Cost Plus Incentive Fee (CPIF)
In a CPIF both the seller and buyer assume risk. Let me explain. In a CPIF contract the buyer is responsible for legitimate costs of the project work, but if the seller does not accurately project esimtates, the seller and the buyer split the responsibility of costs that are greater or less than the estimate.
Cost Plus Award Fee (CPAF)
CPAF is very similar to the CPIF, However the main difference here is the award fee is the sole discretion of the buyer. The buyer would set predetermined expectation for the seller in the contract. If the seller meets those items, to the satisfaction of the buyer, than an award is provided.
