Browse Definitions :
Definition

fixed price contract

Contributor(s): Ivy Wigmore

A fixed-price contract, also known as a lump sum contract, is an agreement between a vendor or seller and a client that stipulates goods and/or services that will be provided and the price that will be paid for them.

Fixed-price contracts are common in many IT contexts, including project management, procurement and outsourcing.  Having the scope and cost clearly defined from the outset saves administrative time and also avoids much of the negotiation time required for less clear-cut types of agreements. However, the resources and time required to produce goods or provide services must be considered carefully by the seller. Those lacking considerable experience with similar endeavors should be wary of fixed-price contracts because it may be difficult for them to foresee all the resources that will be required and how long various tasks will take.

Fixed-price contracts may be inflexible or may stipulate circumstances under which adjustments may be made. In a firm fixed-price (FFP) contract, products or services must be delivered by the agreed-upon date and the payment rendered according to the agreement. Any unforeseen costs of production must be borne by the seller. Other variations on the model include fixed-price incentive fee (FPIF) contracts, in which the seller is offered additional payment for performance beyond that stipulated in the agreement. For example, the seller might deliver ahead of schedule or add features beyond the initial scope of the project.

This was last updated in April 2016

Continue Reading About fixed price contract

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

Extensiones de Documento y Formatos de Documento

Accionado por:

SearchCompliance

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

  • Whistleblower Protection Act

    The Whistleblower Protection Act of 1989 is a law that protects federal government employees in the United States from ...

SearchSecurity

  • reverse brute-force attack

    A reverse brute-force attack is a type of brute-force attack in which an attacker uses a common password against multiple ...

  • orphan account

    An orphan account, also referred to as an orphaned account, is a user account that can provide access to corporate systems, ...

  • voice squatting (skill squatting)

    Voice squatting is an attack vector for voice user interfaces (VUIs) that exploits homonyms (words that sound the same but are ...

SearchHealthIT

SearchDisasterRecovery

  • business continuity policy

    Business continuity policy is the set of standards and guidelines an organization enforces to ensure resilience and proper risk ...

  • business continuity and disaster recovery (BCDR)

    Business continuity and disaster recovery (BCDR) are closely related practices that describe an organization's preparation for ...

  • warm site

    A warm site is a type of facility an organization uses to recover its technology infrastructure when its primary data center goes...

SearchStorage

  • RAM (Random Access Memory)

    RAM (Random Access Memory) is the hardware in a computing device where the operating system (OS), application programs and data ...

  • primary storage (main storage)

    Primary storage is the collective methods and technologies used to capture and retain digital information that is in active use ...

  • cache memory

    Cache memory, also called CPU memory, is high-speed static random access memory (SRAM) that a computer microprocessor can access ...

Close