Page 1 of 1

contract question from Scordo

Posted: Sun Mar 01, 2015 1:38 am
by coolpmp69
Source : Scordo

If you are working on a project with constantly changing scope, which contract type would work best when hiring an outside vendor to complete a portion of the work?
a. Cost reimbursable
b. Lump sum
c.Time and material
d. Fixed price

I picked option A as my answer but the correct answer is C. In my understanding when the scope cannot be defined precisely then you choose cost reimbursable contract and T&M is used where there is no precise SOW at the beginning of the work. Am I missing anything here?

Re: contract question from Scordo

Posted: Sun Mar 01, 2015 12:31 pm
by pank_pmp
Time and Material is correct, since it is less riskier in buyers point of view when scope is not defined. Buyers pays accordingly to resource rates and material used.

Re: contract question from Scordo

Posted: Sun Mar 01, 2015 8:33 pm
by coolpmp69
thanks pank_pmp. Can you give some examples as to when to use cost reimbursable contract types?

Re: contract question from Scordo

Posted: Mon Mar 02, 2015 10:50 am
by dipti5ece
I guess there is a chart showing the risk vs contract ......in PMBOK.

Re: contract question from Scordo

Posted: Mon Mar 02, 2015 2:15 pm
by coolpmp69
@dipti5ece : can you provide the page number/topic name in pmbok?

Re: contract question from Scordo

Posted: Tue Mar 03, 2015 2:58 am
by pank_pmp
Apart from graph (which you can use to memorize), please reread contract types again from Rita. It explains things very clearly! It is hard to explain until and unless you have understanding of them (contracts)!

Re: contract question from Scordo

Posted: Tue Mar 03, 2015 12:49 pm
by signor_rk
That Graph is available in Rita's Book. We can not find it in the PMBOK Guide Fifth Edition.

Re: contract question from Scordo

Posted: Tue Mar 03, 2015 1:49 pm
by coolpmp69
Are you referring to figure 12.1 - Risk to Buyer and Seller According to Contract Types from Rita?

Re: contract question from Scordo

Posted: Tue Mar 03, 2015 2:29 pm
by dipti5ece
Ahh...yes it was Rita