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Project Management: Contracting and Procurement

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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?

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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.

See Also This Related BrainMass Solution

Contracting and Procurement in Project Management


American Property Development Corporation (APDC) a designer and developer of outdoor shopping malls and small office complexes has decided to standardize their project management practices and processes across the national organization. The goal is to standardize on one single project scheduling tool,and have the tool installed and to be operational within 90 days. To this end they are forming a central Project Management Office (PMO). Until now, project managers (there are 40 presently on staff distributed all over the USA and Canada) have been able to use whatever scheduling tool they liked, within their budget constraints. They have also been able to buy equipment and engage contractors at will. The PMO will be determining one scheduling tool that all PMs will be expected to use, exclusive of any other scheduling tools. The PMO will also develop and implement a standardized procurement process. Since the PMs are located across the USA and Canada, a web-based solution seems likely to be the most successful tool.

As the Project Manager, you have been charged with implementing the procurement process and you decide your first project will be purchasing the scheduling tool for ACME Development Corporation.

Deliverable Length: 2500-3500 words/student, 1500-1750 discuss. words

Create a Risk Template without risk responses by listing those risks that you think are appropriate for APDC. You may need to make assumptions about the project. Just be sure to document them in the description of the risk. Consider both project and product risks. Consider external as well as internal risks. Consider risks to the project budget, its schedule, its resources and the product's quality. Categorize and quantify them.

Create a Weighted Scorecard list of functional requirements for a scheduling tool you need to purchase for APDC. Place each of your requirement statements, one per row, in the Requirements column. Decide what weight you want to give to each requirement and place it in the Weight column. Document any assumptions you make in footnotes. When you are finished, the score and weighted score columns should not be blank.

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