With a Cost Plus Incentive Fee (CPIF)
A) the customer can pay a lower price if the contractor can reduce costs
B) the incentive is to come at or below the target cost
C) the contractor can earn a larger profit by reducing costs
D) is not really a cost-reimbursable contract
E) the price is periodically adjusted to allow for changes in materials, labor, or overhead costs

Question

Quizplus · Accepted Answer

A Cost Plus Incentive Fee (CPIF) contract encourages the contractor to efficiently manage costs because the final fee is determined by the contractor's performance against the target cost. If the contractor can reduce costs, they share in the savings, which can lead to a lower price for the customer (A), incentivizes the contractor to come at or below the target cost (B), and allows the contractor to earn a larger profit by reducing costs (C).