Project Management Professional (PMP) Exam Practice – Question1879

Your firm specializes in roller-coaster construction. It recently received an RFP to build the world's most "death-defying" roller coaster. You know that such a roller coaster has never been built before and that this would be a high-risk project. You are receiving a
cost-plus-award-fee contract, which means______________


A.
Your fee will be paid for completed work
B. Your fee amount will not change unless there is a scope change
C. Your fee is generally not subject to appeals
D. If your final cost is greater, you will share costs with the buyer based on a pre-negotiated cost sharing formula

Correct Answer: C

Explanation:

Explanation:
This contract type reimburses the seller for all legitimate costs, but the majority of the fee is earned only based on the satisfaction of broad subjective performance criteria defined and incorporated in the contract. The fee determination is based on subjective
determination of seller performance by the buyer; it generally is not subject to appeals.