What is a Firm Fixed Price Contract (FFP)?

The Firm Fixed Price (FFP) contract in project management is analogous to purchasing something at a store with a fixed price tag, or to paying a predetermined sum for a product with no potential of cost adjustment, regardless of changes in conditions. It is an agreement in which the buyer pays a fixed sum for a certain project or service, and that price remains constant regardless of what occurs throughout the project—whether it takes longer than intended or if unforeseen costs arise. It places the onus on the seller to finish the task within the agreed-upon budget, efficiently managing their resources and efforts to generate a profit within that predetermined pricing.