Fixed Price with Economic Price Adjustment (FPEPA)
The Fixed Price with Economic Price Adjustment (FPEPA) contract is used in project management to set a fixed price for a project, with changes based on how the economy is doing. This kind of contract can help project managers deal with risk by giving them a way to handle changes in costs.
The FPEPA contract lets the project manager set a fixed price for the project. The price can be changed if certain economic factors, like the cost of labour or materials, change. This helps make sure the project stays within budget and gives some room for changes in the economy during the project.
When managing a project with an FPEPA contract, you need to think carefully about the economic indicators that will be used to change prices. The project manager must also keep a close eye on the economy and make any necessary changes to the contract price to make sure the project stays on budget.
Overall, the FPEPA contract can be a helpful tool for managing risk and making sure that projects are finished on time and on budget. But for it to work, it needs to be carefully planned and monitored, and it may not be right for all types of projects or all economic situations. As with any contract, it’s important to work closely with the legal and procurement teams to make sure the terms are fair and protect everyone’s interests.
Usage
It is used in procurement management
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