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Topic History of : Contract risks

Max. showing the last 6 posts - (Last post first)
7 years 7 months ago #2794

Sathye Gomathy

Sathye Gomathy's Avatar

Thanks much!!
7 years 7 months ago #2793

Gbolahan Okulaja

Gbolahan Okulaja's Avatar

The answer is correct,the first time i went through the question,i chose B before i saw your comment.
T&M pays the seller far more than the buyer,as period of the contract increases the seller gets more.
Cost plus fixed fee (CPFF), Cost plus award fee (CPAF) do serve as a good relief/comfortable to the buyer just as it is with FP.

Gbolahan,PMP.
7 years 7 months ago #2768

Sathye Gomathy

Sathye Gomathy's Avatar

Hello: I have been going in circles about questions on Contract risks in Procurement Management.

Could someone please tell me the correct answer to the following question and help me rate the risks in contract types from low to high?

Here is the question:

Which of the following contracts has the most risk for the Buyer?
A. Cost plus fixed fee (CPFF)
B. Time and Materials (T&M)
C. Cost plus award fee (CPAF)
D. Fixed price (FP)

I had always thought the risk goes like this
CPPC - Highest for buyer
CPFF
CPAF
CPIF
T&M
FPEPA
FPIF
FP - Lowest for the Buyer

So my answer was (A - Cost plus fixed fee) however the correct answer was told to be (B - Time and Materials).

Any help clarification, much appreciated.

Thanks!

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