What is an FFP?

FFP stands for Fair Face Price, which is commonly used in the context of procurement, especially within the construction, defense, or project management industries. An FFP contract type means the seller is paid a set amount regardless of the actual costs incurred. This type of agreement is used to encourage efficiency, as the contractor bears the risk of cost overruns. It is important to clearly define the work scope and deliverables to avoid disputes. FFP contracts are favored when project requirements are well understood and can be accurately estimated.