PK0-005 · Question #229
PK0-005 Question #229: Real Exam Question with Answer & Explanation
The correct answer is B: Cost-plus. A cost-plus contract is a type of contract where the buyer agrees to reimburse the seller for the actual costs of the work plus a fee, which can be fixed, percentage, incentive, or award based. This type of contract has the highest risk for the buyer because the buyer has no cont
Question
Which of the following contract types in project procurement has the highest risk for the buyer?
Options
- ATime and material
- BCost-plus
- CFixed-price
- DUnit price
Explanation
A cost-plus contract is a type of contract where the buyer agrees to reimburse the seller for the actual costs of the work plus a fee, which can be fixed, percentage, incentive, or award based. This type of contract has the highest risk for the buyer because the buyer has no control over the cost or quantity of the work and the seller has little incentive to control the costs or complete the work efficiently. The seller may inflate the costs or prolong the work to increase the fee. The buyer may end up paying much more than the estimated budget or the market value of the work.
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