What are the main types of contracts in project procurement?

The three main contract types are fixed-price, cost-reimbursable, and time and materials. Fixed-price contracts set a total price for the defined scope, placing cost risk on the seller. Firm fixed-price is the most common with no price adjustment. Fixed-price incentive fee rewards the seller for exceeding performance targets. Cost-reimbursable contracts reimburse the seller's actual costs plus a fee, placing cost risk on the buyer. Cost plus fixed fee adds a set profit. Cost plus incentive fee adjusts profit based on performance.