Using alternatives specified in the PMBOK® Guide, discuss what kind of contract pricing
might be best for the following procurement situations. Arrange to select a topic "round-
robin style" so that you select the next topic that has not already been discussed. Which of
these topics are better served using one of these contract vehicles: Fixed Price, Cost Plus
(Cost Reimbursable), or Time & Material contracts? Be sure to define each of these contracts
before aligning a topic.
a. Adding a room to your home
b. Landscaping your company's grounds
c. Developing a new software module
d. Purchasing new desktop computers
e. Conducting a survey of employee attitudes
f. To hire a general contractor to do the entire project
g. Purchasing a new car for a project
h. Leasing a new car for a project
i. Leasing an temporary office for the project team
j. Contracting for office supplies
k. to augment the project team with an additional administrative assistant
l. Contracting for a new roof for a home
m. Purchasing of a new cell phone and a service plan for the project team
n. Contracting for new windows for an office building
o. Contracting for new car insurance for the project vehicles
p. Purchasing a new air conditioner/heater (HVAC system) for a business
q. To hire consultants to consult on a key area of the project
r. To hire a product designer to improve the final design of the project
To add a room to my house, I would like to have fixed price contract because I have a pretty
good idea of what I want, then it’s an easy step to write a good fixed price contract. Probably I
would be able to give the vendor enough information about the scope of the project to develop a
reasonable bid. After all, if we don’t know what I want, how will the vendor know what to
build?
This study source was downloaded by 100000861168648 from CourseHero.com on 03-26-2023 03:55:35 GMT -05:00
https://www.coursehero.com/file/17978173/Chap-8/
, Once we have a solid understanding of the project’s scope, then I can pursue a fixed price
contract for that defined scope.
A big reason to use fixed price contracts is to manage risk, but we do pay a premium for it.
Picking the right contract type is an important factor in the overall success of our project.
Choose wisely knowing the strengths and weaknesses of each type and how they relate to our
project.
Cost plus incentive fee (CPIF): the buyer pays the seller for allowable performance costs plus a
predetermined fee and an incentive bonus.
Cost plus fixed fee (CPFF): the buyer pays the seller for allowable performance costs plus a fixed fee
payment usually based on a percentage of estimated costs
Cost plus percentage of costs (CPPC): the buyer pays the seller for allowable performance costs plus a
predetermined percentage based on total costs
http://www.slideshare.net/KishanPhadte/chap12-project-procurement-management
Firm fixed price:
Fixed price plus incentive fee
(FPIF) Cost plus award fee
Time and Material ( T & M)
http://www.slideshare.net/pankajsh10/project-procurement-management-pmbok-5?next_slideshow=1
class,
This study source was downloaded by 100000861168648 from CourseHero.com on 03-26-2023 03:55:35 GMT -05:00
https://www.coursehero.com/file/17978173/Chap-8/
might be best for the following procurement situations. Arrange to select a topic "round-
robin style" so that you select the next topic that has not already been discussed. Which of
these topics are better served using one of these contract vehicles: Fixed Price, Cost Plus
(Cost Reimbursable), or Time & Material contracts? Be sure to define each of these contracts
before aligning a topic.
a. Adding a room to your home
b. Landscaping your company's grounds
c. Developing a new software module
d. Purchasing new desktop computers
e. Conducting a survey of employee attitudes
f. To hire a general contractor to do the entire project
g. Purchasing a new car for a project
h. Leasing a new car for a project
i. Leasing an temporary office for the project team
j. Contracting for office supplies
k. to augment the project team with an additional administrative assistant
l. Contracting for a new roof for a home
m. Purchasing of a new cell phone and a service plan for the project team
n. Contracting for new windows for an office building
o. Contracting for new car insurance for the project vehicles
p. Purchasing a new air conditioner/heater (HVAC system) for a business
q. To hire consultants to consult on a key area of the project
r. To hire a product designer to improve the final design of the project
To add a room to my house, I would like to have fixed price contract because I have a pretty
good idea of what I want, then it’s an easy step to write a good fixed price contract. Probably I
would be able to give the vendor enough information about the scope of the project to develop a
reasonable bid. After all, if we don’t know what I want, how will the vendor know what to
build?
This study source was downloaded by 100000861168648 from CourseHero.com on 03-26-2023 03:55:35 GMT -05:00
https://www.coursehero.com/file/17978173/Chap-8/
, Once we have a solid understanding of the project’s scope, then I can pursue a fixed price
contract for that defined scope.
A big reason to use fixed price contracts is to manage risk, but we do pay a premium for it.
Picking the right contract type is an important factor in the overall success of our project.
Choose wisely knowing the strengths and weaknesses of each type and how they relate to our
project.
Cost plus incentive fee (CPIF): the buyer pays the seller for allowable performance costs plus a
predetermined fee and an incentive bonus.
Cost plus fixed fee (CPFF): the buyer pays the seller for allowable performance costs plus a fixed fee
payment usually based on a percentage of estimated costs
Cost plus percentage of costs (CPPC): the buyer pays the seller for allowable performance costs plus a
predetermined percentage based on total costs
http://www.slideshare.net/KishanPhadte/chap12-project-procurement-management
Firm fixed price:
Fixed price plus incentive fee
(FPIF) Cost plus award fee
Time and Material ( T & M)
http://www.slideshare.net/pankajsh10/project-procurement-management-pmbok-5?next_slideshow=1
class,
This study source was downloaded by 100000861168648 from CourseHero.com on 03-26-2023 03:55:35 GMT -05:00
https://www.coursehero.com/file/17978173/Chap-8/
