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Project Management: Contracting and Procurement

What kind of contract will you pursue for each of the following purchases related to this project?

- Hiring technicians to install and configure the software for your environment
- Hiring a training entity to teach the student PMs the mechanics of using the new tool
- Buying a new server and software to run the tool and house the project database
- Hiring tool usage experts to transfer knowledge to the student PMs about the use of the tool on the job for the first 60 days after going live
- Planning for the removal and disposal of the scheduling tool software and hardware that are no longer to be used

Which contract type is the most appropriate for the product or service purchase?
How would you effectively justify your selection to other project managers?
What arguments might they use to debate your selection?
How would you effectively address those arguments?
What risks are associated with the type of contract selected?
Explain exactly how you factored these risks into your selection.
What general purposes and functions does the contract type address?
How does the selected contract meet the project objectives?

Solution Preview

The type of contracts for project management procurements

Hiring technicians to install and configure the software for your environment

The most appropriate contract type for the service purchase is firm fixed price contracts (FFP). This contract type is the ideal type since the price of installing and configuring the software for the environment will be determined from the outset and not subject to any changes unless the scope of work changes. The cost accrued due to no performance of the product will accrue to the technicians and they will be obligated to complete the installation and reconfiguring until the effort is complete and the software is performing. The project managers might use the argument that if the scope of software installation and reconfiguration has not been well defined and specified then it could result to higher costs for the project (Grisot, 2009).
In order to effectively address such a problem, the full scope of what needs to be done will be given to the technicians so that they can able to cover the whole work and avoid additional costs due to extra unfinished work that was not specified. Risks involved include inadequate performance by the technician team and the risk of not covering the entire scope of the task. These risks occur because, this contract type does not offer any incentive to the technicians to perform higher and should the scope of the task not entirely define it would be expensive to the company. The contract type though is preferred when risk is minimal, and its purpose is to provide for a firm price and places maximum risk and full responsibility on the contractor for any costs, losses or profits. The contract though gives incentive to the contractor to perform in order to avoid any losses and to control cost. The selected contract type helps in controlling the costs of the project and in ensuring optimum usage of available resources assigned to projects (Davison & Sebastian, 2009).

Hiring a training entity to teach the student PMs the mechanics of using the new tool

The most appropriate contract type for the service purchase is cost plus award fee contract (CPAF). This contract type is most ideal since the majority of fee will be earned only based on the satisfaction of broad subjective performance criteria on the ability of the PM students understanding the ...

Solution Summary

The following posting helps discuss contracts that are needed for various projects.

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