In a firm-fixed-price contract, the contractor’s profit is

In a firm-fixed-price contract, the contractor agrees to complete the project for a set price. The contractor's profit is incorporated into the bid (A) by estimating costs (labor, materials, overhead) and adding a desired profit margin. Penalties and incentives (B) are more common in other contract types. Profit is not directly tied to the schedule in this contract type (C), and it is not negotiated separately (D). (Fundamentals of Crew Leadership, Fourth Edition, NCCER, Section 4.1.3 Understanding Contract Types)