PK0-005 Project Life Cycle Practice Question
Which contract type places the most cost risk on the seller?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Fixed-price
A fixed-price contract puts cost risk on the seller because the price is fixed regardless of actual costs.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Fixed-price
Why this is correct
Seller bears cost overruns.
- ✗
Cost-reimbursable
Why it's wrong here
Cost-reimbursable shifts risk to the buyer.
- ✗
Time and materials
Why it's wrong here
T&M shares risk.
- ✗
Cost plus incentive fee
Why it's wrong here
Incentive fee may reduce risk, but still cost-reimbursable.
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