pick the right contract Types of contracts It's a good idea to know a little bit about the most commonly used contract types. They can help you come up with a contract that will give both you and the seller the best chance of success. If you want to see a really thorough overview of the different types of contracts, check out the U.S. Federal Acquisition Regulation web site: http://www.acquisition.gov/far/ Fixed price contracts Some PMP exam questions might just refer to a contract type by its acronym (FP, CPFF, etc.). Fixed price (FP) means that you are going to pay one amount regardless of how much it costs the contractor to do the work. A fixed price contract only makes sense in cases where the scope is very well known. If there are any changes to the amount of work to be done, the seller doesn't get paid any more to do it. Fixed price plus incentive fee (FPIF) means that you are going to pay a fixed price for the contract and give a bonus based on some performance goal. You might set up a contract where the team gets a $50,000 bonus if they manage to deliver an acceptable product before the contracted date. Cost-reimbursable contracts Don't worry about trying to cram these into your head right now--you'll get a lot of practice with them throughout the chapter.