KINDLY ASSIST BY EXPLAINING THE BELOW TABLE WITH REGARD TO THE TYPE OF CONTRACT AND THEIR TRADE OFFS BETWEEN VARIOUS ISSUES. |
| Fixed-price Contract | Cost -reimbursement contract | Time & Material Contract |
Customer's cost risk | Firm fixed price | Fixed price with escalation | Cost plus fixed fee | Cost |
Customer cost at risk | Low | <________________________> | High |
contractor's incentive | High | <________________________> | | Low |
Customer control | Easy | <________________________> | | Tough |
control effort needed | Little | <________________________> | | A Lot |
customer flexibility | low | <________________________> | | High |
Information needed for control | Little | <________________________> | | A Lot |
information needed at contract award | All | <________________________> | | little |
Final price known at award | Known | <________________________> | | Unknown |
claims resolution | Difficult | <________________________> | | Unnecessary |
Risk premium | Undisclosed | <________________________> | | Actual cost |