A new project was initiated that involves new technology and subsequently has never been done before. What type of contract would to owner want to issue to reduce or eliminate as much risk as possible?a.Cost plus incentive feeb.Cost plus fix feec.Lump sumd.Firm fixed price and Lumpsume.Firm fixed price
Question
A new project was initiated that involves new technology and subsequently has never been done before. What type of contract would to owner want to issue to reduce or eliminate as much risk as possible?a.Cost plus incentive feeb.Cost plus fix feec.Lump sumd.Firm fixed price and Lumpsume.Firm fixed price
Solution
The owner would likely want to issue a Firm Fixed Price contract to reduce or eliminate as much risk as possible. This type of contract is typically used when the scope of work is clearly defined and the risk of unexpected costs is low. In a Firm Fixed Price contract, the contractor is responsible for all cost overruns, which means the owner's financial risk is significantly reduced. This is especially beneficial in a project involving new technology where there may be unforeseen challenges or costs.
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