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
In a fixed-price contract, the seller bears the risk of cost overruns because the price is set 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.
- ✗
Cost-reimbursable
Why it's wrong here
Cost-reimbursable places risk on the buyer.
- ✓
Fixed-price
Why this is correct
Correct: Seller bears cost risk.
- ✗
Time and materials (T&M)
Why it's wrong here
T&M shares risk; seller gets paid for time and materials.
- ✗
Cost-plus-fixed-fee
Why it's wrong here
A type of cost-reimbursable, buyer bears risk.
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