With a Firm Fixed Price Contract (FFP)
A) the customer assumes the risk of cost overruns
B) the price to the customer remains the same
C) the contractor is assured of being reimbursed for all allowable expenses
D) contractor risks underestimating the cost and losing money on the project
E) cutting-corners to reduce costs is a potential risk

Question

Quizplus · Accepted Answer

In a Firm Fixed Price Contract, the price to the customer remains the same regardless of the actual costs incurred by the contractor, which means the contractor bears the risk of cost overruns and could lose money if the project is underestimated. This type of contract also poses a risk of cutting corners to reduce costs, as the contractor might seek ways to minimize expenses to protect their profit margin.