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The disadvantage of a fixed price contract is work can be incomplete or sloppy if they fall behind. When a vendor is working on a fixed price contract, they do their best to keep their cost down. The more they save themselves, the more they profit. In efforts to keep their profit margins high, they could reduce the quality of their work.
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What are the Disadvantages of a construction Fixed-Price Contract?
The disadvantage of a fixed price contract is work can be incomplete or sloppy if they fall behind. When a vendor is working on a fixed price contract, they do their best to keep their cost down. The more they save themselves, the more they profit. In efforts to keep their profit margins high, they could reduce the quality of their work.
What contract type puts the full risk on the contractor?
Fixed Pric
What contract shifts the risk of cost overruns to the contractor?
fixed price with economic price adjustments
IS E P C Contract as a fixed sum price?
kind of.
What is the proper amount of money to obligate at the award of a firm fixed-price contract?
The full amount of the contract
What contract type places the greatest risk on the buyer?
fixed price + Incentive
Which type of contract shifts the risk of cost overruns to the contractr?
Fixed-Price Incentive
What is a Fixed Price Incentive contract?
A Fixed Price Incentive contract is a type of agreement where the contractor is paid a fixed price for the project, but can earn additional incentives based on their performance, such as cost savings or meeting specific milestones. This contract structure encourages efficiency and innovation, as the contractor has a financial motivation to complete the project under budget or ahead of schedule. The contract typically includes a ceiling price, ensuring that costs do not exceed a predetermined limit. This approach balances risk between the buyer and contractor while promoting collaboration.
What are the traditional procurement methods using in the construction industry?
Fixed Price Contracting is a traditional method
Which type of contract addresses situations when the exact product or service cannot be determined?
fixed-celling price with retroactive price redetermination
What is a firm fixed price bid?
This means that the price bid for the contract will (if the winning bid) be the actual price paid by the buyer and cannot change (even if it results in a loss to the seller).
What is the current price per gallon of propane in Tennessee?
I just got charged 2.39 per gallon with a fixed price contract--Little Italy, AR
