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Certified Associate in Project Management · PMI
Select one answer.
Written by other learners. Comments can disagree with the marked answer — check the official documentation when in doubt.
Why the other options are incorrect: A. CPAF and fixed price → CPAF is a subtype of cost-reimbursable contracts, but not one of the two most common categories. C. Cost-reimbursable and T&M → T&M is a hybrid contract, combining features of both fixed price and cost-reimbursable, but it is not as broadly used across industries as the two main types. D. T&M and CPAF → Both are niche or specialized contract types compared to the more broadly applicable fixed price and cost-reimbursable.
Fixed price contracts establish a set price for the project, offering stability and clear budgeting but potentially bearing more risk for the contractor if costs exceed the agreed-upon price. Cost-reimbursable contracts, on the other hand, reimburse the contractor for the actual costs incurred plus an additional fee, providing more flexibility but potentially leading to higher costs if not managed effectively. These two contract types offer different risk and cost-sharing arrangements between the parties involved in the project.
Answer is B - Page 471 PMBOK 6th edition diamond point 3 / Page 191 PMBOK 7th edition last sentence in top paragraph