A project manager is working on a software development project.

Since the requirements are not fully defined and the project involves a vendor partnership, an agile approach is suitable. Agile supports iterative development and welcomes evolving requirements. A Time and Materials (T&M) contract is commonly used in such cases where scope is uncertain. This type of contract allows flexibility in scope and payment based on actual work performed.

According to the Agile Practice Guide, “When scope cannot be clearly defined early in the project, time and materials or cost-reimbursable contracts may be more appropriate.” T&M contracts provide flexibility to accommodate changes, which aligns well with agile delivery.

Option B is incorrect because cost-reimbursable with predictive does not support flexibility in evolving requirements.

Option C (Fixed-price with predictive) assumes fixed scope, which is unsuitable for this scenario.

Option D (MOU) is not a formal contract and lacks enforceable terms.