Contract Type
EVM Terms
Reviewed by forProject Technology - updated Sep 2026
Quick definition: Contract Type refers to the various forms a contract can take for acquiring goods or services, such as Cost Plus Fixed Fee, Cost Plus Incentive Fee, Firm Fixed Price, Fixed Price Incentive Fee, or Unit Price.
Each Contract Type allocates cost risk differently between the contractor and the customer — a fixed-price contract puts more risk on the contractor, while a cost-reimbursement contract shifts more risk to the customer. The type chosen shapes how incentives, fees, and cost-sharing work throughout the life of the contract.
Why it matters
Contract Type affects how closely EVM and cost surveillance are typically applied — cost-reimbursement contracts generally carry more EVM reporting requirements since the customer bears more cost risk. Understanding the contract type is a starting point for understanding what performance data is being required and why.
Also known as
N/A
Used in
Determines the cost-risk allocation referenced in Contract Target Cost and Contract Target Price calculations
FAQ
Why does Contract Type matter for EVM?
Cost-reimbursement contract types typically carry more EVM reporting requirements, since the customer is bearing more of the cost risk and needs more visibility into performance.
What's the difference between Cost Plus Fixed Fee and Cost Plus Incentive Fee?
A Fixed Fee contract pays a set fee regardless of cost performance, while an Incentive Fee contract adjusts the fee up or down based on how actual costs compare to the target.
Definition maintained by forProject Technology.
© 2026 forProject Technology, Inc.
© 2026 forProject Technology, Inc.
