Which of the following contract types is most appropriate when costs are NOT well known and the buyer absorbs the cost risk?

Question

Quizplus · Accepted Answer

Cost-Plus-Fixed-Fee (CPFF) contracts are most appropriate when costs are not well known and the buyer absorbs the cost risk. In CPFF contracts, the buyer pays the seller for the costs incurred during the project plus a fixed fee that covers the seller's profit. This type of contract provides the seller with incentives to control costs while shifting the cost risk to the buyer.

Which of the Following Contract Types Is Most Appropriate When