cost plus contracts Question

_____________ is the riskiest of the cost plus contracts for the seller.

(A) CPPC

(B) CPFF

(C) CPAF

(D) CPIF

 

 

None of them pose any risk to the seller as he is guaranteed to get reimbursed for the costs incurred.  The only questions is: Which one offers lowest profit margin for the seller?  It is CPFF. 

Chandra

chowdary2104's picture

CPAF is the riskiest for the seller among other options. Here there is no guarantee for Award Fees. It depends on the Buyer. The seller always should be vigilant and satisfy the buyer in order to get his fee.Regards,CHOWDARY

 

Yasser,

What is the correct answer and explanation?

 

Chandra

II guess it should be b (CPFF)

_____________ is the riskiest of the cost plus contracts for the seller.

(A) CPPC

(B) CPFF

(C) CPAF

(D) CPIF

 

Answer

(D) CPIF  (In CPIF contracts, if the final costs are less or greater than original estimated costs, then both buyer and seller share costs from the departures based upon a prenegotiated cost sharing formula) .

Cost plus is one of the most lucrative businesses there is. A lot of businessmen are practicing this for profit. - Phillip Elden