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Question: 1 / 875

What characterizes fixed price contracts?

Costs vary based on contractor experience

Price is not subject to adjustments

Fixed price contracts are characterized primarily by the fact that the price agreed upon is not subject to adjustments based on the contractor's performance or the cost of goods and services required to fulfill the contract. This means that once the contract is awarded, the agreed-upon price remains fixed, providing a level of budget certainty for the contracting party. The contractor must effectively manage their resources to deliver the project within the established price, which can incentivize efficiency and cost control.

While it is often true that fixed price contracts can be easier to manage compared to cost reimbursement contracts due to their clear pricing structure, that aspect is not the defining characteristic of fixed price contracts. The elements of contractor experience and specifications are also not unique to fixed price contracts, as these factors can apply to various types of contracts.

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They are easier to manage than cost reimbursement contracts

There are no specifications required

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