CIS 550 / Week 11Chapter 12 Review Questions12A-1 What are the fundamental differences between fixed-price and cost-plus contracts?A fixed-price contract under which the contractor agrees to perform all work specified in the contract for a fixed price. Such an agreement must have a clearly defined scope and the risk of any cost-overages is borne by the contractor. Under a cost-plus contract, the contractor is reimbursed for all direct allowable costs such as materials, labor or travel and paid an additional fee to cover overhead and profit. These contracts put the burden of risk on the client and, as a result, incentives may be used to control costs,
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