what is fixed-price contract, and what are the benfit of chosing it

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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what is fixed-price contract, and what are the benfit of chosing it ?

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Introduction

A contract where the price is fixed as negotiated by the parties is known as a Fixed Price Contract. Such a contract is not affected by any internal or external factors. Even if there are cost over-runs due to inflation or any other reason, it will not affect the overall contract price. Also, even if there are savings in the contract, the price will be unaffected.

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