Plan and Manage Procurement

Contract-type selection is one of the most calculation-friendly areas on the exam. Fixed-price contracts push cost risk onto the seller (buyer wants price certainty); cost-reimbursable contracts push cost risk onto the buyer (seller is reimbursed cost plus a fee); time & materials sits in between, typically for short, ill-defined engagements.

Know the fixed-price variants: FFP (Firm Fixed Price — no adjustment), FPIF (Fixed Price Incentive Fee — reward for hitting targets), FP-EPA (Economic Price Adjustment — for long contracts exposed to inflation/currency risk). Know the cost-reimbursable variants: CPFF (fixed fee regardless of cost), CPIF (fee varies with performance), CPAF (fee is a largely subjective award).

Study focus: expect at least one point-and-click or calculation question on Cost-Plus-Incentive-Fee sharing ratios or determining which party bears the most risk under a given contract type.