Project Management Professional (PMP) Exam Practice – Question1611 | Project Management Professional PMP Mock Exam Practice

Contract type selection is dependent on the degree of risk or uncertainty facing the project manager. From the perspective of the buyer, the preferred contract type in a low-risk situation is______________

A. Firm-fixed-price
B. Fixed-price-incentive
C. Cost-plus-fixed fee
D. Cost-plus-a-percentage-of-cost

Correct Answer: A

Explanation:

Explanation:

Buyers prefer the firm-fixed-price contract because it places more risk on the seller. Although the seller bears the greatest degree of risk, it also has the maximum potential for profit. Because the seller receives an agreed-upon amount regardless of its costs, it is
motivated to decrease costs by efficient production.