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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.

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2mo ago

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Related Questions

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


Which incentive type contract is most appropriate when there is a solid base for pricing and objective targets can be established for performance?

A Fixed-Price Incentive Fee (FPIF) contract is most appropriate when there is a solid base for pricing and objective performance targets can be established. This contract type allows for a predetermined price with an incentive for the contractor to reduce costs while still meeting the performance objectives. It aligns the interests of both parties, encouraging efficiency and innovation while providing a clear framework for compensation based on performance outcomes.


A Fixed-Price Incentive (Firm Target) (FPIF) contract is awarded for 25 million to design a computer based training course for the Air Force with a period of performance of 18 months. What reports if?

none


What contract type puts the full risk on the contractor?

Fixed Pric


What is a price incentive.?

What was a price incentive


What is the cost plus fixed fee contract?

A type of cost reimbursement contract that assigns minimal responsibility for costs and for which a fixed fee is negotiated. The fee provides an incentive for a subcontractor to contract for efforts that might otherwise pose too great a risk to it to assume.


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 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 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