In the following scenario which one of the above two contracts should we select?
You have been appointed a project manager for ABC Inc. and are given a project. While in the planning stage, you find that your organization is lacking the skills and manpower to complete a part of the work and the scope is also unclear. You decide to contract this work to a third party. What kind of contract will you select in this case?
(a) Cost reimbursable
(b) Time & material
(c) Fixed fee
(d) PO Saving Changes...
Fixed fee is out of the question when scope is vague and PO is not a contract type.
T&M would be suitable if the size of the work is fairly small, but otherwise, I'd lean towards a cost reimbursable contract with some shared risk/reward (e.g. CPIF).
Kiron Saving Changes...
Thomas WalentaGlobal Project Economy ExpertHackenheim, Germany
Saf, practically I would agree with Kiron.
From the PMBoK wording, I tend to T&M. These are '.. often used for staff augmentation' (you lack skills and manpower), and '.. a precise SOW cannot be quickly prescribed' (your scope is unclear).
On contrast a cost-reimbursable contract should have a SOW but it is expected to change significantly - that is not what is in the question.
So it is b. Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
(a) and (b) are good choices if you plan on managing the work yourself. On the other hand (c) and (d) are better financial options if the supplier will be managing the work. Saving Changes...
