The degree of risk shared between the buyer and seller is determined by the:

Question

Options

• Acontract type.
• Bsponsors.
• Cproject manager.
• Dstakeholders.

• A
  74% (26)
• B
  3% (1)
• C
  17% (6)
• D
  6% (2)

Explanation

Contract type determines the risk distribution between buyer and seller because each contract structure allocates financial and performance risk differently - for example, a fixed-price contract shifts most risk to the seller, while a cost-reimbursable contract places more risk on the buyer.

Why the distractors are wrong:

• B. Sponsors provide funding and high-level oversight but don't define how risk is legally allocated between parties.
• C. Project manager manages risk within a project but doesn't determine the contractual risk-sharing structure between buyer and seller.
• D. Stakeholders have interests in the project outcome but have no authority over procurement contract terms.

Memory tip: Think of the contract as a "risk dial" - the contract type sets where that dial points between buyer and seller. Fixed-price = dial toward seller; cost-plus = dial toward buyer.

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