Which type of contracts is primarily used when many uncertainties in contract performance are present?

Cost-Plus-Fixed-Fee contracts are particularly suited for situations with significant uncertainties in contract performance. Under this contract type, the contractor is reimbursed for allowable incurred costs and receives a fixed fee as profit. This arrangement mitigates risks for the contractor since they are guaranteed compensation for costs, regardless of the contract's ultimate outcome.

In situations where uncertainties—such as unclear project scopes, evolving requirements, or unpredictable external factors—exist, this format provides assurance that the contractor will cover their expenses while still earning a predetermined profit margin. This can encourage contractors to engage in projects that might seem too risky or ambiguous under a fixed-price structure, where they bear the entire risk of cost overruns.

This emphasis on flexibility and cost reimbursement allows for adaptation as project variables change, making it an ideal choice when uncertainties prevail.