Select a service-based industry and answer these questions regarding your selection: What does â€œcost riskâ€ mean? What two elements contribute to the calculation of cost risk? Explain and discuss the impact of cost risk as it relates to your selection. Explain and discuss why firm fixed price contracts are the greatest motivators of efficiency, as it relates to your selection. Explain and discuss the potential danger of using a fixed price redetermination contract, as it relates to your selection. Explain and discuss the objective that is satisfied by using an incentive arrangement. What are the elements of an incentive contract? Explain and discuss the irony involved in setting cost targets.
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