A fixed-price contract is a contract where the amount of payment does not depend on the amount of resources or time expended, as opposed to a cost-plus contract which is intended to cover the costs plus some amount of profit. Such a scheme is often used in military and government contractors to put the risk on the side of the vendor, and control costs. However, historically when such contracts are used for innovative new projects with untested or undeveloped technologies, such as new military transports or stealth attack planes, it can and often results in a failure if costs greatly exceed the ability of the contractor to absorb unforeseen cost overruns.
However, such contracts continue to be popular despite a history of failed or troubled projects, though they tend to work when costs are well known in advance. Some laws have been written which prefer fixed-price contracts, however, many maintain that such contracts are actually the most expensive, especially when the risks or costs are unknown.
Tom Enders, Airbus's German chief executive, has noted the fixed-price contract for the A400 transport was a disaster rooted in naivety, excessive enthusiasm and arrogance, stating, "If you had offered it to an American defence contractor like Northrop, they would have run a mile from it". He stated that unless the contract was renegotiated, the project must be abandoned.
For example, the U.S. A-12 Avenger II development contract was a fixed-price incentive contract, not a fixed price contract, with a target price of $4.38 billion and ceiling price of $4.84 billion. It was to be a unique, stealthy, flying wing design. On 7 January 1991, the Secretary of Defense canceled the program. It was the largest contract termination in DoD history. Rather than saving costs, the craft was projected to consume up 70 percent of the U.S. Navy's aircraft budget within three years.
From
Rohit Mathur
A Student
Take care friends
The amount of money subtracted from the price sale is the discount. For instance, a sofa of £234 could be discounted in a sale at 50% off, meaning the £234 sofa is available during the sale at £117.
original price-sale price. Then original sale price/the answer to the previous.
If the original price was 50.00 - then the sale price would be 37.50
Discount = Original Price minus Sale price.
The sale price was 120.
Fixed Pric
The disadvantage of a fixed price contract is work can be incomplete or sloppy if they fall behind. When a vendor is working on a fixed price contract, they do their best to keep their cost down. The more they save themselves, the more they profit. In efforts to keep their profit margins high, they could reduce the quality of their work.
The disadvantage of a fixed price contract is work can be incomplete or sloppy if they fall behind. When a vendor is working on a fixed price contract, they do their best to keep their cost down. The more they save themselves, the more they profit. In efforts to keep their profit margins high, they could reduce the quality of their work.
fixed price with economic price adjustments
kind of.
The full amount of the contract
A contract is considered perfecta if the object of sale has been clearly identified; the price has been determined; and there are no suspensive conditions
fixed price + Incentive
Fixed-Price Incentive
A Fixed Price Incentive contract is a type of agreement where the contractor is paid a fixed price for the project, but can earn additional incentives based on their performance, such as cost savings or meeting specific milestones. This contract structure encourages efficiency and innovation, as the contractor has a financial motivation to complete the project under budget or ahead of schedule. The contract typically includes a ceiling price, ensuring that costs do not exceed a predetermined limit. This approach balances risk between the buyer and contractor while promoting collaboration.
fixed-celling price with retroactive price redetermination
A fixed contract, often referred to as a fixed-price contract, is an agreement between parties where the price for goods or services is established in advance and does not change regardless of the costs incurred during the project. This type of contract provides budget certainty for the buyer and places the risk of cost overruns on the seller. Fixed contracts are commonly used in construction and project management, ensuring that the seller must efficiently manage their resources to meet project requirements within the agreed price.