Fixed Price With Economic Price Adjustment Notes: Definitions & Explanations PDF | Download eBooks
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Fixed Price With Economic Price Adjustment Definition:
Fixed price with economic price adjustments contract provides a special provision allowing for predefined final adjustments to the contract price due to changed conditions for specific commodities.
A Guide to the Project Management Body of Knowledge by Project Management Institute
Fixed Price With Economic Price Adjustment Notes:
When two parties agree on working together, a contract binds them legally to fulfill the requirements of each other in addition to following the terms and conditions. There are two broad classes of contracts; fixed price contracts and cost-reimbursement contracts. One of the type of fixed price contract is fixed price with economic price adjustments. Fixed price with economic price adjustments (FPEPA) contract involves setting a certain amount by the buyer to be paid to the seller. However, it provides the flexibility to adjust the cost at the end of the contract based on the changed economic conditions. Economic conditions may include price changes or inflation. This type of contract is used when the seller has to perform or provide for a long period of time or if the payment is made in a foreign currency.
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