Free

Identify at least three types of project procurement contracts. Describe each and discuss the risk associated with both the buyer and the seller - Essay Example

Comments (0) Cite this document
Summary
The three types of project procurement contracts are; Firm Fixed Price, Time & Material, and Cost Reimbursable Contracts (Carstens, Richardson & Smith, 2013). The Firm Fixed Price Contract is the most popular type and is characterized by a set price that is unchangeable with the…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.9% of users find it useful
Identify at least three types of project procurement contracts. Describe each and discuss the risk associated with both the buyer and the seller
Read TextPreview

Extract of sample "Identify at least three types of project procurement contracts. Describe each and discuss the risk associated with both the buyer and the seller"

Types of Contracts Affiliation The three types of project procurement contracts are; Firm Fixed Price, Time & Material, and Cost Reimbursable Contracts (Carstens, Richardson & Smith, 2013). The Firm Fixed Price Contract is the most popular type and is characterized by a set price that is unchangeable with the exception of alterations in the scope of work. Therefore, liability with regards to increased costs above the agreed contractual price falls absolutely on the seller. This is especially the case where the variance stems from poor workmanship or logistics.
Cost Reimbursable Contracts are also referred to as Cost-Plus Contracts. This contract settle the costs incurred by the seller and a pre-determined fee above the actual costs which represent the profit enjoyed (Carstens, Richardson & Smith, 2013). The seller therefore embarks on a project without limitations to expenditure but files all expenses incurred to be passed on to the buyer. This contract exposes the buyer to more risk than the seller because valuation will contain all expenses despite cases of poor workmanship and material resource mismanagement. An example of risk is where the buyer only receives receipts of purchases that are subject to negligence of the seller who may overlook good pricing of commodities in favor of convenience.
Time and Material Contracts contain elements that are characteristic of the Cost Reimbursable Contracts and The Firm Fixed Price Contract. The contracts are best applied in cases of ambiguity or unclear statement of work (Carstens, Richardson & Smith, 2013). An example is where the workers need to be increased for shorter executions with an aim of meeting challenges previously unforeseen on the project. Alternatively, engagement of experts on certain aspects of work may require such contracts. This type of contract shares the burden of risk between the sellers and buyers. The risk falls more on the partner who requires the adjustments beyond basic agreements of project procurement contract. However, most cases call for open ends on buyers cost increase during periods of uncertainty.
References
Carstens, S., Richardson, G. & Smith, R. (2013). Project Management Tools and Techniques: A Practical Guide. Broken Sound Parkway, NW: CRC Press. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Identify at least three types of project procurement contracts Essay”, n.d.)
Identify at least three types of project procurement contracts Essay. Retrieved from https://studentshare.org/information-technology/1672904-identify-at-least-three-types-of-project-procurement-contracts-describe-each-and-discuss-the-risk-associated-with-both-the-buyer-and-the-seller
(Identify at Least Three Types of Project Procurement Contracts Essay)
Identify at Least Three Types of Project Procurement Contracts Essay. https://studentshare.org/information-technology/1672904-identify-at-least-three-types-of-project-procurement-contracts-describe-each-and-discuss-the-risk-associated-with-both-the-buyer-and-the-seller.
“Identify at Least Three Types of Project Procurement Contracts Essay”, n.d. https://studentshare.org/information-technology/1672904-identify-at-least-three-types-of-project-procurement-contracts-describe-each-and-discuss-the-risk-associated-with-both-the-buyer-and-the-seller.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Identify at least three types of project procurement contracts. Describe each and discuss the risk associated with both the buyer and the seller

Some Project Procurement Management Issues

...decisions B. The help determine the weighting criteria for RFP responses C. To help identify and assess risks D. In the development of a WBS (Work Breakdown Structure) 19. All project procurements go through three distinct major phases: A. Definition of what products or services need to be bought; selection of a seller for the products or services; execution and assessment of the contracted services of products B. Development of a WBS; Execution of the project; Closing of the project procurement C. Development of an RFP; receipt of an RFP; assessment of an RFP D....
8 Pages(2000 words)Assignment

Project risk and Procurement

...for both large and small projects is discussed below. In general the risk management strategy mainly encompasses 5 steps that can be used to get rid of the issues. The first step is the identification of threats and also identifying its characteristics. The next step is to assess the vulnerability of the specific thetas or risks identified in the project. Once, the extent of vulnerability is identified, the next activity is to determine the risks. In this phase, a project manager generally attempts to underpin the consequence of the risk...
10 Pages(2500 words)Essay

Procurement & Contracts Coursework

...” and the private sector “service provider” assumes the risks associated with the project (Akintoye, Hardcastle, Beck, Chinyio, & Asenova, 2003, p. 461). Given that the global economic downturn has impacted the UK government’s ability to deliver and meet the demands for health services, a PFI-PPP procurement route is the more innovative and least costly option over traditional procurement routes. This report will make the case for a PFI-PPP procurement route over traditional procurement routes for the expansion of the national referral hospital which will provide additional clinical services, filter...
23 Pages(5750 words)Assignment

Project Risk and Procurement Management

...? Project Risk and Procurement Management Introduction Challenges associated with globalization, the environment and technology directly influence how successfully businesses manage their own supply chains. The study evaluates IBM’s committed to decreasing costs of procurement through developing and utilizing a highly automated supply-chain system across the globe. IBM strategically created an environment of cooperation with the suppliers by having the suppliers convey products and services to IBM’s internal procurement system, which ensures a hands-free procurement of products and services. Enterprises around the globe...
10 Pages(2500 words)Essay

Contracts & Procurement

..., are all legally binding. Consideration: A contract usually results in each party promising the other a valuable benefit for obliging a contract. In projects, this usually means that one party promises to deliver certain goods, property or services by a specified date and the other promises to accept the goods, property or services and pay for them. Failure of one party to keep its promise can lead to action by the other for breach of contract6. Risks, such as supply uncertainties, labour problem, backlog in work completion schedules, and so on can affect the accuracy with which the project was defined, estimated and budgeted. In...
10 Pages(2500 words)Essay

Procurement Routes and the Different Formats of Tendercontract Documents

...tendering and contract approaches. Some practical applications of such models could be predictions of actual construction time, cots analysis considering risks, uncertainties of different client sector, contractor selection methods used, contractual agreement and project type. IV - DISCUSSION A. PROCUREMENT POLICIES In this part of the study we analyze a selection of procurement policies as given by councils, government bodies, local authorities, companies and organizations. An example of the procurement policies used by the Department of Health and Cambridge City Council would be given here...
33 Pages(8250 words)Dissertation

Procurement, contracts and strategies

..., and improved regional working. It is also associated with and supports other council events, mainly with respect to supremacy, financial procedures, risk management, community engagement, and the council’s loom to scheme management. It is significant that the council makes sure that the finest provider is identified for every contract, including undersized and medium sized ventures and third segment providers. This procurement strategy and the supporting documents mirror feedback received from legislatures from the private sector and third sector, Where suitable, thought will be given to separating procurements into plenty, supporting...
16 Pages(4000 words)Assignment

Identify each terms

...of feminism. Race to the Bottom/ Raising the Bottom Raising to the bottom is a socio-economic idiom used to describe an association between countries, countries, region or countries that is an result of aspects such as free trade globalization, economic deregulation or even neo-liberalism Bracero program The bracero program was a sequence of laws and political contracts, this program was started by in 1942 by an exchange of political remarks between the United States and Mexico. This was done with the intention of the introduction of momentary contract manual workers from Mexico to the United States. Imperialism This implies to a policy that was followed by several...
2 Pages(500 words)Assignment

Critical Theory in Relation to Racism in Sports

6 Pages(1500 words)Essay

Using Improvement Science Models to Promote Quality and Safety

2 Pages(500 words)Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Identify at least three types of project procurement contracts. Describe each and discuss the risk associated with both the buyer and the seller for FREE!

Contact Us