PK0-005 · Question #455
Which of the following best describes why a project manager would decide to sign a fixed-price contract with a vendor?
The correct answer is A. The scope of the project deliverable is clearly defined. A Fixed-Price Contract is most suitable when the project scope, requirements, and deliverables are clearly and thoroughly defined. This contract type sets a predetermined price for the work, regardless of the actual costs incurred, transferring the risk of cost overruns to the…
Question
Which of the following best describes why a project manager would decide to sign a fixed-price contract with a vendor?
Options
- AThe scope of the project deliverable is clearly defined.
- BThere is a non-disclosure agreement in place.
- CThere are multiple requirements for the product.
- DThe PM wants to simplify the logistics of the required product.
How the community answered
(46 responses)- A93% (43)
- B2% (1)
- D4% (2)
Explanation
A Fixed-Price Contract is most suitable when the project scope, requirements, and deliverables are clearly and thoroughly defined. This contract type sets a predetermined price for the work, regardless of the actual costs incurred, transferring the risk of cost overruns to the vendor. It is advantageous when the project details are well-understood and unlikely to change.
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