Firm Fixed Price StatementCost Plus Fee The client is entitled to know the contractors actual costs and profit The contractors profit is limited or defined by the contract To be effective, project scope must be well$-$defined prior to award The customer bears the risks of cost overruns The contractors profit is determined by the competing contractors The customer must pay all the contractors allowable costs The contractor bears the risks of cost overruns Sometimes bad contractors can get awards by making poor estimates Contractors must be knowledgeable of costs in the marketplace To be effective, clients must be knowledgeable about costs