Which of the following is true about fixed price with price adjustment contract?
A) It is used for short projects.
B) It provides an incentive for performing on the project above the adjusted baseline in the contract.
C) The most common use of this type of contract is the inflation adjusted price.
D) In this contract, the organization agrees to pay the contractor for the cost of performing the service.
E) It requires good documentation of the costs that occurred on the project.

Question

Quizplus · Accepted Answer

Fixed price with price adjustment contract is primarily used for long-term projects where there is a possibility of inflation affecting the project cost. The contract defines a baseline price which is adjusted periodically based on the current rate of inflation. Hence, the most common use of this type of contract is the inflation adjusted price. Other options are not correct as they do not accurately describe this type of contract.

Which of the Following Is True About Fixed Price with Price