Contract Types Flashcards
A Firm Fixed Price (FFP)
involves setting a fixed total price for a defined product, service, or result to be provided. Because the scope of your construction project is well defined up front with little risk to area or architectural changes, and the buyer has precisely specified the requirements of the project, establishing a firm fixed price contract would be the best option for this project.
Fixed-price contracts include Firm Fixed Price (FFP), Fixed-Price Incentive Fee (FPIF), and Fixed Price with Economic Price Adjustment (FP-EPA), among others.
Cost Plus Fixed Fee contract (CPFF)
the seller is reimbursed for all allowable costs for performing the contract work and receives a fixed-fee payment calculated as a percentage of the initial estimated project cost.
Cost Plus Incentive Fee contract (CPIF)
the seller is reimbursed for all allowable costs for performing the contract work and receives a predetermined incentive fee based upon achieving certain performance objectives as set forth in the contract.
Time and Materials contract (T&M)
a hybrid type of contractual arrangement that contains aspects of both cost-reimbursable and fixed-price contracts. They are often used for staff augmentation, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed.
