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Cost Plus Contract

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nazrulq
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Cost Plus Contract

Postby nazrulq Thu Nov 23, 2017 5:17 pm

Question:
Which of the following does not encourage the seller to control cost and as a result, places the greatest risk to the buyer!

Cost-Exclusive
Cost Plus fixed fee
Cost plus incentive fee
Cost plus percentage of cost

I think the right answer should be Cost Contract ( where seller gets no benefit.).Ref :Rita Malcahy
8th Edition , Page -473

Hence it is absent by elimination we can easily eliminate Option 1 & 3.

ThenCost Plus Percentage will benefit seller if seller subcontract in higher price he will get more percentage but Cost plus fixed fee isthe most challenging to control cost for the seller as their profit is fixed.

So Option 4 is the correct choice by elimination.But the right answer would be Cost Contract. Hence this question's answer is not in the PMBOK question could be eliminated by PMI!

Any further explanation should be much appreciated.

Regards,

Nazrul

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