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Earned Value Management and Firm Fixed Price

1. What is the Contracting Officer's (CO) role in Earned Value Management (EVM)?

2. For the following, choose whether you would use a Firm Fixed Price (FFP ) or a Cost Plus contract (and defend your choice):

o The removal of a malignant tumor from your brain.

o A physical exam required by your new employer as a condition of hiring.

o Arthroscopic knee surgery to repair damaged cartilage.

o Changing your car's oil.

o Fixing the loud, grinding noise your car makes whenever you start it on a very cold morning.

o Replacing your kitchen faucet with a new Moen Model X900 faucet.

o Eliminating whatever is causing water to leak through your basement ceiling.

o Treatment of a mysterious rash on your neck that itches terribly.

o Curing your recurring bouts of severe depression.

o Having a lawyer write a will for you.

o Having a lawyer defend you in an auto accident case in which the other party is claiming negligence on your part.

o Hiring someone to teach your daughter to play the violin well enough to get selected for the school orchestra.

Solution Preview

What is the Contracting Officer's (CO) role in Earned Value Management (EVM)?

The contracting officer's role in earned value management is in determining whether the cost control system is on target. The earned value is the value placed on each step of a process. "Physical progress is measured in dollars, so schedule performance and cost performance can be analyzed in the same terms" (Kidasa, 2010). This value can be compared against planned and actual costs, to predict whether a project is performing sufficiently or whether future trends may indicate that changes must be made in the project. Changes in productivity, efficiency or other factors could be necessary, to keep the project on target.

Question 2
For the following, choose whether you would use a Firm Fixed Price (FFP ) or a Cost Plus contract (and defend your choice):

o The removal of a malignant tumor from your brain.
A cost plus contract is best, as a tumor may be located in various parts of the brain. One may require one hour of surgery, while another may require four hours of surgery. "The cost of each procedure can vary dramatically based upon age, location, gender, and insurance coverage" (Health Grades, 2010). http://www.healthgrades.com/procedures/profile/Brain_Surgery_%28Craniotomy%29/cost/. A cost plus contract makes allowances for man hours spent performing specific tasks, among other aspects.

o A physical exam required by your new employer as a condition of hiring.
A firm fixed price is desirable, as all physical exams for new hires require the same set of tasks to be completed and can easily be determined in advance. A physical exam is an area of health care in which "there is a high probability of adequate price competition" (Defense Logistics Agency, 2008). To compete with other in the area, the price needs to be stated and guaranteed. https://www.fbo.gov/index?s=opportunity&mode=form&id=7d339c4a532283f17b6cdd74c260e178&tab=core&tabmode=list&print_preview=1.

o Arthroscopic knee surgery to repair damaged cartilage.
A cost plus contract is best, as some people may have more cartilage to remove ...

Solution Summary

The Earned value management and the firm fixed price are determined.

$2.19