What are the two most common contract types used in a project?

The correct answer is B. Fixed price contract and cost-reimbursable contract. The two primary contract categories in project procurement are fixed price and cost-reimbursable. Fixed price contracts set a defined total payment regardless of the seller's actual costs, placing cost risk on the seller. Cost-reimbursable contracts reimburse the seller's…

Project Management Fundamentals and Core Concepts

Question

What are the two most common contract types used in a project?

Options

ACost plus award fee (CPAF) contract and fixed price contract
BFixed price contract and cost-reimbursable contract
CCost-reimbursable contract and time and material (T&M) contract
DTime and material (T&M) contract and cost plus award fee (CPAF) contract

How the community answered

(53 responses)

A
2% (1)
B
92% (49)
C
2% (1)
D
4% (2)

Explanation

The two primary contract categories in project procurement are fixed price and cost-reimbursable. Fixed price contracts set a defined total payment regardless of the seller's actual costs, placing cost risk on the seller. Cost-reimbursable contracts reimburse the seller's actual allowable costs plus a fee, placing cost risk on the buyer. Time and material (T&M) is considered a hybrid of these two, and Cost Plus Award Fee (CPAF) is a subtype of cost-reimbursable. Because T&M and CPAF are derivatives rather than standalone primary types, the foundational answer is fixed price and cost-reimbursable.

Topics

#Contract types#Procurement#Fixed-price contracts#Cost-reimbursable contracts

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