There are 2 basic types of contracts: the fixed-price contract and the cost-plus contract. Each has several common variations. It is not unusual for any specific contract to have special terms and agreements, so the basic contract is just the starting point. The project manager is most interested in the terms that define and help to control costs, schedule, and quality. Examples of the contract types include the following:

• Firm fixed price
• Fixed price with targets
• Fixed price at cost
• Time and materials
• Cost sharing
• Cost plus

Address the following for each of the 3 bulleted items listed in the assignment description:

• Pick one of the contract types above and briefly describe a project work example where it might be best used for. Who do you think bears most risk, the buyer or the seller and why?
• What are the six main steps in the procurement management process? What is an example of an output from each step?
• What are the four key points principled negotiating is based on? How would you use principled negotiating in real life?
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