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According to the PMBOK (7th edition) by the Project Management Institute (PMI), Fixed Price Economic Price Adjustment Contract (FPEPA) is a "fixed-price contract, but with a special provision allowing for predefined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases (or decrease) for special commodities".
A fixed-price contract is a contract where the contract payment does not depend on the amount of resources or time expended by the contractor, as opposed to cost-plus contracts. Fixed-price contracts are often used for military and government contractors to put the risk on the side of the vendor and control costs.
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.
With a lump sum contract or fixed-price contract, the contractor assesses the value of work as per the documents available, primarily the specifications and the drawings. At pre-tender stage the contractor evaluates the cost to execute the project (based on the above documents such as drawings, specifications, schedules, tender instruction and ...
The Final Price of the contract is expressed as follows: Final Price = Actual Cost + Final Fee. Note that if Contractor Share = 1, the contract is a Fixed Price Contract; if Contractor Share = 0, the contract is a cost plus fixed fee (CPFF) contract. [4] For example, assume a CPIF with: Target Cost = 1,000; Target Fee = 100
The Agile fixed price is a contract framework most suitable for complex IT projects, where scope, progress and costs are difficult to determine in advance. For standard projects, which have already taken place in the same or a similar way in the past, the test phase and the assessment of the project progress may be skipped.
Price proportion cost: The price proportion cost refers to the percent of the total cost of the end benefit accounted for by a given component that helps to produce the end benefit (e.g., think CPU and PCs). The smaller the given components share of the total cost of the end benefit, the less sensitive buyers will be to the components' price.
Level of risk sharing: a bundled payment may be structured to offer upside (a share of savings if costs are below the bundle price), downside (a share of excess costs if costs are above the bundle price), or both. Providers may bear all of the savings and/or excess costs (100% risk), or they may bear a fraction of the risk while payers continue ...