Fixed-Price Engineering in Regulated Industries: Why It Changes Everything

The choice between fixed-price and time-and-materials contracts is not a procurement formality in regulated engineering — it is a fundamental decision about incentive alignment. T&M contracts transfer project risk to the client: if the vendor discovers that the compliance scope is larger than estimated, the client pays. Fixed-price contracts require the vendor to own the discovery risk. In regulated industries where scope surprises are common — where a HIPAA audit log requirement turns into a six-week architecture project — the contract structure determines whether the vendor has skin in the game.

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