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A. the cost risk is higher.
B. the cost risk is lower.
C. there is a medium amount of risk.
D. the risk is shared by all parties.
Option-B The cost risk is lower
This contract is having advantage as a contract with less cost risk involved in the project.
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It is B - the cost risk is lower.
In FP type buyer has less cost risk.
The advantage is for the buyer, because the price is fixed and there is no risk for buyer. The risk of cost over runs shifts entirely to the seller, hence the cost risk is high for the seller.
Correct answer is (B) cost risk is lower, advantage for the buyer
B. the cost risk is lower -----------
This is very tricky. If we all saying Option B.. which is considering cost risk is lower.
This can be D - as well in some cases. Some cost may happen from the dispatch to the arrive point.
Cost of raw materials may vary from season to season
