What is Fixed Price Incentive Fee Contract (FPIF)?

In project management, the Fixed Price Incentive Fee (FPIF) contract is similar to buying a product in that the seller sets a fixed price, but there is an extra incentive if the seller meets or exceeds specific agreed-upon performance criteria, similar to receiving a bonus for great work. It is a contract in which both the buyer and seller agree on a defined price for a project, and if the seller completes the task under budget or ahead of schedule, they are rewarded for their efficiency. It’s a win-win situation that pushes the seller to complete the job efficiently while keeping the buyer’s expenditures predictable.