CIPS Exam L4M3 Topic 9 Question 21 Discussion

Actual exam question for CIPS's L4M3 exam

Question #: 21
Topic #: 9

[All L4M3 Questions]

Which of the following is always an advantage of using fixed price arrangement in a contract for buying organisation?

ABuyer can allocate budget with certainty

BBuyer can harness falling market price

CSupplier always receives a fixed margin

DSuitable for contracts that last 5 years or more

Show Suggested Answer

Suggested Answer: A

Advantages of using fixed pricing arrangement are as below:

- Budget/income certainty - prices are fixed up front and should not change

- The impact of changes to the supplier's cost base is not fed through to the purchaser. If costs diminish, the supplier will benefit from this, and if costs rise, the purchaser will benefit

LO 3, AC 3.3

by Rolland at Sep 01, 2023, 02:33 AM

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