Risk Management Professional Exam Prep

Answer: A - In a fixed fee plus cost project, the buyer has the cost risk. (Editor’s note: An example is paying a handy man $500 to hang up your new TV. You would pay for costs such as the bracket and parking outside your Boston apartment, since there is zero public parking).

Key takeaway: While your vendor should realize that managing cost is important to your future relationship, it is best to put in provisions and incentives for a vendor to manage costs in such a relationship. While you might be tempted to avoid this type of deal, often it is not possible in projects that have uncertainty about resource needs.