Here, would choosing (b) over (d) be a better choice, or vice versa?
You are in the process of developing procurement contracts for your project for which the scope is not very clear. You know that you will be very busy with other activities and will not have the time to monitor contractor work and audit the payment details. In this case, what kind of contract will you select? (a) Fixed price (b) Cost plus fixed fee (c) Fixed price incentive fee (d) Time and material Saving Changes...
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Thomas WalentaGlobal Project Economy ExpertHackenheim, Germany
With time&material you need to monitor work and invoicing closely. With CPFF the profit for the contractor is fixed, so he has an incentive to keep cost contained, hence not adding unnecessary work or cheating on invoices. Saving Changes...
Yes, agree with Thomas.
We use the the tool/technique of answering PMP questions.as follows:-
1) a & c are not the correct answer as the scope is not clear.
2) d is not the correct answer as PM should monitor the work and take the risk (it mentioned that do not have a time to monitor the contract work).
3) the only correct is (b) which is CPFF.
BR,
Mansour Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
I've seen CPFF misused by suppliers. It's not unusual to see extremely expensive resources used exclusively on such contracts. That's because the fee is usually a percentage of the cost. Therefore, the higher the cost of the resources, the higher the fee in absolute terms. Saving Changes...
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