You are a risk auditor for your company. You are reviewing the contract types a project manager has used in her project. Of the following, which contract type has the most risk for the project manager

In a CPPC contract, the seller is reimbursed for all allowable costs and also receives a fee calculated as a percentage of those costs, meaning higher costs directly produce a higher fee for the seller. This structure gives the seller a financial incentive to allow or even inflate costs, exposing the buyer to unlimited and uncontrolled cost risk. No other standard contract type creates this perverse dynamic for the buyer.

Time and material contracts carry some cost risk for the buyer but are typically capped and controlled through defined labor rates and material limits.

Cost plus incentive fee contracts include a performance-based incentive structure that motivates the seller to control costs, reducing buyer exposure compared to CPPC.

Fixed-price contracts transfer the majority of cost risk to the seller, making them the least risky option for the buyer.