Comments on: Contract type: Here’s the best one… http://pmstudent.com/contract-type-heres-the-best-one/ Helping new and aspiring project managers reach their career goals! Wed, 08 Feb 2012 14:16:34 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: dwaynewright (dwaynewright) http://pmstudent.com/contract-type-heres-the-best-one/#comment-22471 dwaynewright (dwaynewright) Sat, 20 Mar 2010 11:47:43 +0000 http://pmstudent.com/?p=5356#comment-22471 <strong>Twitter Comment</strong> <a href="http://twitter.com/dwaynewright" title="Twitter Comment" rel="nofollow"> <div class="ccimg1" title="dwaynewright (dwaynewright)" style="float:left;margin-right:10px;padding:0;width:60px;height:60px;background:url(http://pmstudent.com/wp-content/plugins/chatcatcher/picbg.jpg) no-repeat top;cursor:hand;"> </div> <div class="ccimg2" title="dwaynewright (dwaynewright)" style="float:left;margin-left:-70px;margin-right:10px;padding:0;width:60px;height:60px;background:url(http://purl.org/net/spiurl/dwaynewright) no-repeat top;cursor:hand;"> </div> </a> Contract type: Here’s the best one… from ThE pM sTuDeNt by DerekHuether - [link to post]<br /><br /> - <a href="http://chatcatcher.com" target="_blank" rel="nofollow">Posted using Chat Catcher</a> Twitter Comment


Contract type: Here’s the best one…
from ThE pM sTuDeNt by DerekHuether – [link to post]

– Posted using Chat Catcher

]]> By: Bill Duncan, IPMA-B, ex-PMP http://pmstudent.com/contract-type-heres-the-best-one/#comment-22457 Bill Duncan, IPMA-B, ex-PMP Sat, 20 Mar 2010 01:31:24 +0000 http://pmstudent.com/?p=5356#comment-22457 One important clarification ... the "risk" mentioned in the main article as well as in the comments is actually COST risk. Technical risk and schedule risk are not addressed except to the extent that they affect cost. For any of you involved in AEC, "fixed price" is the same as "lump sum." And a couple of other items: -- Usually, the requirement to spell out precisely what is wanted on a FFP contract rests with the buyer, not the seller. If the seller defines the scope, the buyer will have difficulty comparing proposals. -- ANY scope change under a fixed price contract means an adjustment to the contract price unless the seller chooses to accept it at no cost. One important clarification … the “risk” mentioned in the main article as well as in the comments is actually COST risk. Technical risk and schedule risk are not addressed except to the extent that they affect cost.

For any of you involved in AEC, “fixed price” is the same as “lump sum.”

And a couple of other items:
– Usually, the requirement to spell out precisely what is wanted on a FFP contract rests with the buyer, not the seller. If the seller defines the scope, the buyer will have difficulty comparing proposals.
– ANY scope change under a fixed price contract means an adjustment to the contract price unless the seller chooses to accept it at no cost.

]]> By: Bill Duncan, IPMA-B, ex-PMP http://pmstudent.com/contract-type-heres-the-best-one/#comment-26042 Bill Duncan, IPMA-B, ex-PMP Sat, 20 Mar 2010 01:31:00 +0000 http://pmstudent.com/?p=5356#comment-26042 One important clarification ... the "risk" mentioned in the main article as well as in the comments is actually COST risk. Technical risk and schedule risk are not addressed except to the extent that they affect cost. For any of you involved in AEC, "fixed price" is the same as "lump sum." And a couple of other items: -- Usually, the requirement to spell out precisely what is wanted on a FFP contract rests with the buyer, not the seller. If the seller defines the scope, the buyer will have difficulty comparing proposals. -- ANY scope change under a fixed price contract means an adjustment to the contract price unless the seller chooses to accept it at no cost. One important clarification … the “risk” mentioned in the main article as well as in the comments is actually COST risk. Technical risk and schedule risk are not addressed except to the extent that they affect cost.

For any of you involved in AEC, “fixed price” is the same as “lump sum.”

And a couple of other items:
– Usually, the requirement to spell out precisely what is wanted on a FFP contract rests with the buyer, not the seller. If the seller defines the scope, the buyer will have difficulty comparing proposals.
– ANY scope change under a fixed price contract means an adjustment to the contract price unless the seller chooses to accept it at no cost.

]]> By: DerekHuether http://pmstudent.com/contract-type-heres-the-best-one/#comment-22045 DerekHuether Sat, 13 Mar 2010 13:42:42 +0000 http://pmstudent.com/?p=5356#comment-22045 Pawel, What I love about your comments is you never give anyone a free pass. You are correct, risks and opportunities are always going to be present. We can't deny they exist. But, I wrote these definitions and viewpoints to be as non-subjective as possible. I could have written about exceptions for each, but I didn't want to do that in this post. Perhaps I should have included a <i>most of the time</i> at the end of each definition. Thank you for keeping me on my toes. Pawel,
What I love about your comments is you never give anyone a free pass. You are correct, risks and opportunities are always going to be present. We can’t deny they exist. But, I wrote these definitions and viewpoints to be as non-subjective as possible. I could have written about exceptions for each, but I didn’t want to do that in this post. Perhaps I should have included a most of the time at the end of each definition.

Thank you for keeping me on my toes.

]]> By: DerekHuether http://pmstudent.com/contract-type-heres-the-best-one/#comment-26041 DerekHuether Sat, 13 Mar 2010 13:42:00 +0000 http://pmstudent.com/?p=5356#comment-26041 Pawel, What I love about your comments is you never give anyone a free pass. You are correct, risks and opportunities are always going to be present. We can't deny they exist. But, I wrote these definitions and viewpoints to be as non-subjective as possible. I could have written about exceptions for each, but I didn't want to do that in this post. Perhaps I should have included a <i>most of the time</i> at the end of each definition. Thank you for keeping me on my toes. Pawel,
What I love about your comments is you never give anyone a free pass. You are correct, risks and opportunities are always going to be present. We can’t deny they exist. But, I wrote these definitions and viewpoints to be as non-subjective as possible. I could have written about exceptions for each, but I didn’t want to do that in this post. Perhaps I should have included a most of the time at the end of each definition.

Thank you for keeping me on my toes.

]]> By: Pawel Brodzinski http://pmstudent.com/contract-type-heres-the-best-one/#comment-22036 Pawel Brodzinski Sat, 13 Mar 2010 10:25:02 +0000 http://pmstudent.com/?p=5356#comment-22036 Maybe I'm getting too far into the weeds but I have a couple of remarks: 1. Risk is always blended. The focus may be on one side or the other but that's never black or white kind of situation. The often case with fixed price contracts is that vendor rejects to do anything which isn't clearly specified in specifications, not even a tiny thing. Given that creating specification which is detailed enough and describes exactly what customer want is practically impossible the client will always need customizations. Then, depending on vendor's approach some risk goes back to the customer. 2. Time and Material contracts are more risky for the client. Both sides can finish work anytime, but as far as vendor can get another deal that's not a problem. On the other have client is left with unfinished project which is really hard to be overtaken by another vendor so if the clash happens usually it ends up with starting the thing from a scratch. Maybe I’m getting too far into the weeds but I have a couple of remarks:

1. Risk is always blended. The focus may be on one side or the other but that’s never black or white kind of situation. The often case with fixed price contracts is that vendor rejects to do anything which isn’t clearly specified in specifications, not even a tiny thing. Given that creating specification which is detailed enough and describes exactly what customer want is practically impossible the client will always need customizations. Then, depending on vendor’s approach some risk goes back to the customer.

2. Time and Material contracts are more risky for the client. Both sides can finish work anytime, but as far as vendor can get another deal that’s not a problem. On the other have client is left with unfinished project which is really hard to be overtaken by another vendor so if the clash happens usually it ends up with starting the thing from a scratch.

]]>