Firm-fixed-price contract

A firm-fixed-price (FFP) contract is an agreement where the buyer and seller agree on a set price for a project's entire scope upfront. This means the seller agrees to complete the work for that specified price, regardless of actual costs incurred. It provides price certainty for the buyer and limits financial risk for the seller, encouraging efficient performance. However, if costs increase significantly, the seller absorbs the additional expense, unless there are specific contract clauses allowing adjustments. FFP contracts are common when project requirements are clearly defined and unlikely to change.