Project contracts generally fall into which of the following three broad categories?

Question

Options

• AFixed-price, cost reimbursable, time and materials
• BMake-or-buy, margin analysis, fixed-price
• CTime and materials, fixed-price, margin analysis
• DMake-or-buy, lump-sum, cost-plus-incentive

• A
  83% (40)
• B
  6% (3)
• C
  2% (1)
• D
  8% (4)

Explanation

Option A is correct because project management frameworks (including PMI/PMBOK) recognize fixed-price, cost-reimbursable, and time & materials as the three fundamental contract categories - each representing a different way of allocating cost risk between buyer and seller.

Why the distractors are wrong:

• B mixes in "make-or-buy" (a procurement decision, not a contract type) and "margin analysis" (a financial evaluation technique, not a contract category).
• C replaces cost-reimbursable with "margin analysis," which again is an analytical tool, not a contract form.
• D includes "make-or-buy" and "lump-sum" - lump-sum is actually a subtype of fixed-price, not a separate top-level category, and make-or-buy is still a decision framework.

Memory tip: Think FCT - Fixed, Cost-reimbursable, T&M. These map to how risk is distributed: Fixed = seller bears cost risk, Cost-reimbursable = buyer bears it, T&M = shared. Any answer mixing in "make-or-buy" or "margin analysis" is pulling from a different topic entirely and can be eliminated immediately.

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