Explaining risk in fixed-price contracts

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Reference no: EM1344302

Q2) Fixed price IT contracts are attractive to buyer organizations because buyers believe these contracts shift almost all of the risk to the contractor. The federal government is striving to use fixed-price contracts as much as possible for IT acquisition contracts as a method to control the cost of IT projects.

Your Question. It is recognized that fixed-price contracts offer obvious advantages to buyer organizations because they transfer almost all of the risk to the contractor. Some observers argue that buyers cannot become complacent when using fixed price contracts because they still retain certain risks. What risks, if any, may the buyer organizations be assuming when they rely on fixed-price contracts?

Reference no: EM1344302

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