Certified Professional Property Administrator (CPPA) Module 3 Practice Test

What is Cost-Plus-Fixed-Fee (CPFF) contract?

Reimburses costs plus a fixed fee that does not fluctuate with actual costs (but may adjust with scope) Reimburses costs plus a fixed fee that fluctuates with costs Reimburses only fixed price No cost reimbursement

Correct Answer:

Reimburses costs plus a fixed fee that does not fluctuate with actual costs (but may adjust with scope)

Explanation:

Cost-Plus-Fixed-Fee means the contractor is reimbursed for allowable costs actually incurred and receives a fixed amount of profit that does not change with the actual costs. The fixed fee is negotiated at the outset and stays the same unless the scope of work changes, in which case the fee may be adjusted. This setup is used when costs are uncertain, shifting cost risk to the buyer while giving the contractor a predictable, fixed profit.

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