(22.6). Fixed-price contracts,where the contractor bids a fixed price to complete a system development, may be used to move project risk from client to contractor. If anything goes wrong, the contractor has to pay. Suggest how the use of such contacts may increase the likelihood that product risks will arise.
Fixed-price contracts may increase product risks in many different ways. The objective of the contractor bidding on a job is to bid at a price that will allow for him to make a profit while delivering a specified product. Often bidders have to be competitive in time and price, as-in who can deliver the product for the lowest contract price in a specified amount of time. This leads to contractors promising completion time frames for projects that may not necessarily be obtainable. To compensate, the contractor produces a rushed product that may not fulfill all of the clients requirements and may lack in the area of security. This is a result of not having sufficient amount of time to fully test and debug the project.
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