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A. Time and material (T&M)
B. Firm fixed price (FFP)
C. Firm fixed price (FFP)and Time and material (T&M)
D. Cost plus incentive fee (CPIF)
E. Cost plus fixed fee (CPFF)
A Firm Fixed Price Contract (FFP): Once the contract is signed, the contractor is legally bound to complete the task within the agreed amount of money or time. Since the contractor has to complete the task within a fixed amount, he bears the risks. Any cost increase due to bad performance of the Contractor will be the responsibility of the Contractor.
Firm Fixed Price has the highest risk to the contractor. The contractor is under the maximum uncertainty.
FFP. Moosa's answer is correct and very complete.
I think that the right answer is:
B. Firm fixed price (FFP)
D & E, because, it is highly uncertain to ascertain the labor hours, material requriements, period etc., necessary to perform the contract. If the costs or anything non forecasted or not considered, the cost of the contract graph will be steeply increase.
There is a combination of two options, since Option B (FFP) is not enough dangerous if the the option E (CPFF) doesn´t exist in the project.
