FIXED PRICE VS FIXED PRICE INCENTIVE FEE
Several team members have been transferred to another project, so the project manager needs additional resource support from a new supplier. The project manager is concerned about the cost risk of using a new supplier at this stage of the project. Now, the project manager needs to work with the procurement team to establish specifications and type of contract to be used. What should be done?
• A. Recommend a time and material (TM) contract.
• B. Recommend a cost plus incentive fee (CPIF) contract.
• C. Recommend a fixed price incentive fee (FPIF) contract.
• D. Recommend a firm fixed price (FFP) contract.
I had recommended Firm Fixed Price, where as answer says FPIF
My thought: There is no urgency shown but only concern from the PM to cost risk for using new supplier. Hence to safeguard the interest of PM, we should go for FFP , why should I go for fixed price incentive?