Quetions about Procurement Contract types for Seller/Buyer risks (Important Topic)
Submitted by pmpfresher on Thu, 11/17/2011 - 07:59
I'm quite confused to all the contract type for Seller/Buyer risk comparison. Since it's an important topic in PMP exam. So hope any expert here can explain to me the details, list down from highest to lowest risk for Seller and Buyer.
1. Cost Plus Percentage of Costs (CPPC)
2. Cost Plus Fixed Fee (CPFF)
3. Cost Plus Incentive Fee (CPIF)
4.Cost Plus Award Fee (CPAF)
5. Time & Material Contracts (T&M)
6. Firm Fixed Price (FFP)
7. Fixed Price Incentive Fee (FPIF)
8. Fixed Price Award Fee (FPAF)
Greatly appreciate for the help in advance.
Forums:
admin
Fri, 11/18/2011 - 03:58
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Hi THis topic has been
Hi
THis topic has been discussed here before. Different books have given conflicting views. Finally one has to answer in the context of the question.
The contention is T&M is more risky vs Cost reimburseable or vice versa. If you assume Cost reimbursable is more risky then the order you have given is correct.
pmpfresher
Mon, 11/21/2011 - 05:32
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just confused CPPC and CPFF
Hi
Thanks for your kind response.
Can you just explain below 2 types, which one has more risk on Seller? Greatly appreciate.
1. Cost Plus Percentage of Costs (CPPC)
2. Cost Plus Fixed Fee (CPFF)